Receiving an inheritance is a profound, often bittersweet, experience. In my near three decades as a financial planner, I’ve sat at many kitchen tables with clients holding a will from a parent they’ve just lost.
They’re grieving, and the last thing on their mind is legal jargon like “probate” or “executor.”
It’s always amazed me how unprepared most people are for this moment, but I always understood why. but it made me feel better knowing I can be there and answer the questions such as “Michael, how do I receive an inheritance and settle the estate?“
My first job in those moments is to be a calm guide. The process isn’t as scary as it seems when you have a clear map.
This guide is that map for those who cannot help personally. We will walk through the entire inheritance process step-by-step, from the initial days after a death to the moment the assets are in your hands. And we’ll cover the critical tax questions along the way.
Key Points: Understanding the Inheritance Journey
- The Executor is in Charge: The person named as the executor in the will (or appointed by a court) is legally responsible for managing the entire estate settlement process.
- Probate is the Path: Most estates must go through a court-supervised process called probate to validate the will, pay debts, and approve the distribution of assets.
- Timeline Varies Greatly: Expect the process to take anywhere from six months for a simple estate to well over a year for a complex one.
- Taxes Are a Key Hurdle: While you likely won’t pay inheritance tax, you need to understand how estate taxes and capital gains on inherited property work.
The First 30 Days: How To Receive Your Inheritance Money After Someone Passes
Before any money can be distributed, a few critical administrative steps must happen. The following are the basic steps for how you would typically go about receiving your inheritance money.
Locating the Will and Identifying the Executor
The process begins with the Last Will and Testament. This legal document is the instruction manual for the estate. It names the Executor of Estate (or “personal representative”), the person or institution tasked with steering the estate through the legal process.
Obtaining the Death Certificate
The executor will need multiple official copies of the death certificate. This is the essential legal document required by banks, government agencies, and courts to begin settling the deceased’s affairs.
Pro Tip: Order more copies than you think you will need. And ask if your state can provide a “long form” – that includes the cause of death.
Petitioning the Probate Court
The executor typically hires an estate attorney and files a petition with the local Probate Court. The court’s first job is to officially validate the will and grant the executor the legal authority to act on behalf of the estate.
This authority is granted in a document called the Letters Testamentary.
⚠️ Michael’s Take: The Executor’s Job is Tough
Being an executor is a thankless task. They are legally and financially responsible for doing everything by the book according to complex inheritance laws. They can’t just write you a check, even if the will is clear. They must follow a strict legal process. Patience and support for the executor will make the entire process smoother for everyone and help avoid inheritance disputes.
The Heart of the Matter: Navigating the Probate Process
Probate is the formal, court-supervised process of winding down an estate, like a legal checkpoint for every asset. Here’s what the executor does during this phase:
Inventory All Estate Assets:
The executor must find and create a detailed list of all assets. This includes bank accounts, investment portfolios, real estate, and personal property. This is known as the estate valuation.
Establish an Estate Bank Account:
A new bank account is opened in the name of the estate. All of the deceased’s cash is consolidated here, and it’s used to pay the estate’s bills and probate fees.
Notify Creditors and Pay Debts:
The executor must notify known creditors and publish a notice to catch any unknown ones. All legitimate debts of the deceased—mortgages, credit card bills, final medical expenses—are paid from the estate account before beneficiaries receive anything. Yes, this means creditors can take inheritance money from the estate to settle valid debts.
File Final Taxes:
The executor is responsible for filing the deceased’s final income tax return and, if the estate is large enough, a Federal Estate Tax return (IRS Form 706).
The Timeline: How Long Does It Take to Get Inheritance Money?
This is the most common question I get from beneficiaries, and the honest answer is: it depends.
- Simple Estates (6-9 months):
An estate with a clear will, a single bank account, and a house can often be settled in this timeframe. - Complex Estates (1-2+ years):
An estate with business interests, multiple real estate holdings (which may require ancillary probate), or conflict among beneficiaries can take much longer.
A mandatory waiting period for creditors to make claims (typically 3-6 months) sets the floor for how long the inheritance claim process will take.
Distribution: How Inheritance Money and Assets are Paid Out
Once all debts and taxes are paid and the court approves the final accounting, the executor can finally begin the inheritance distribution.
- Cash: For cash inheritances, the executor will issue an inheritance check directly from the estate bank account.
- Stocks and Bonds: The executor will work with the brokerage firm to transfer the securities from the deceased’s account into a new brokerage account in your name.
- Real Estate: The property title will be legally transferred to your name via a new deed.
- Retirement Accounts (IRAs, 401ks): These are non-probate assets that pass directly to the person listed on the beneficiary designation form, bypassing the will and probate. You will need to contact the financial institution to set up an Inherited IRA, which has its own specific and complex withdrawal rules.
- Living Trusts: If assets were held in a Living Trust (either a Revocable Trust or Irrevocable Trust), they also bypass probate. The successor trustee named in the trust document is responsible for distributing the assets according to the trust’s terms in a process called trust administration.
The Big Question: Is My Inheritance Taxable in 2025?
This is another area of major confusion. Let’s clear it up.
Inheritance Tax vs. Estate Tax
The good news: there is no federal inheritance tax. The money or property you receive is not considered taxable income by the Internal Revenue Service (IRS). A handful of states (like Maryland and Nebraska) do have a state inheritance tax.
The Federal Estate Tax, however, is a tax on the total value of the deceased’s estate before it’s distributed. For 2025, the Estate Tax Exemption is a massive $13.61 million. This means over 99.9% of estates will pay zero federal estate tax.
For a deep dive, read my complete guide on whether inheritance is taxable.
“Stepped-Up Basis” on Inherited Property
This is a crucial and valuable tax benefit. When you inherit an asset like a stock or a house, its cost basis for tax purposes is “stepped up” to its fair market value on the date of death.
- Example: Your father bought a stock for $10,000. It was worth $100,000 when he passed away. You inherit it. Your new cost basis is $100,000. If you sell it the next day for $100,000, your capital gain is zero.
What To Do With Inheritance Money?
Receiving a lump sum can be overwhelming. My advice is always the same: don’t make any sudden moves.
- Pause: Park the money in a safe, high-yield savings account for at least six months.
- Assemble Your Team: This is the time to consult with a financial planner and a CPA.
- Make a Plan: Use the money to align with your long-term goals: pay off high-interest debt, fund your retirement, or invest for the future. For more, see my guide on Estate Planning Basics.
FAQ: Common Inheritance Scenarios
What happens if there is no will?
If someone dies without a will (known as dying “intestate”), state intestate succession laws dictate who inherits the assets. The Probate Court will appoint an Administrator of Estate to manage the process, which is often longer and more expensive.
How do I find out if I have an inheritance?
If you haven’t been contacted by an executor, you can search for unclaimed property in the deceased’s name at Unclaimed.org, the official site of the National Association of Unclaimed Property Administrators (NAUPA).
How long does a beneficiary have to claim their inheritance?
There is generally no deadline for a known beneficiary to claim their inheritance once the estate is ready for distribution. The executor’s duty is to contact you. If you cannot be found, the funds are turned over to the state as unclaimed property.
What documents are needed to claim an inheritance?
Typically, you will need to provide the executor with a government-issued photo ID to prove your identity. The executor handles the core legal documents like the will and death certificate.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
