Inheritance Planning
A one-time event with lifetime consequences. We help families turn an inheritance into durable, tax-efficient wealth — without the costly mistakes most heirs walk into.
Talk to an AdvisorWhy Inheritances Are Complex
The IRS treats an inherited IRA, a brokerage account, a rental property, an annuity, and a stock-option grant in completely different ways. Get the categorization wrong and you'll over-pay tax, miss a deadline, or both.
| Asset Type | Step-Up in Basis? | Tax to Beneficiary | Distribution Deadline |
|---|---|---|---|
| Traditional IRA / 401(k) | No step-up (IRD) | Ordinary income on every dollar | 10-Year Rule (SECURE Act) for most non-spouse heirs |
| Roth IRA / 401(k) | N/A | Tax-free (if 5-year rule met) | 10-Year Rule — no annual RMDs |
| Non-Qualified Annuity | No step-up | Ordinary income on gains (LIFO) | 5 years from date of death, or lifetime stretch if elected in year 1 |
| Taxable Brokerage | Step-up to date-of-death FMV | Long-term cap gains on future appreciation only | None — hold indefinitely |
| Real Estate | Step-up to date-of-death FMV | Long-term cap gains on future appreciation only | None — no forced liquidation |
| NSOs (Executive) | No step-up (IRD) | Ordinary income on spread at exercise | Plan document — often 1–3 years post-death |
| ISOs (Executive) | Complex adjustment | Capital gains (ordinary income trigger waived) | Plan document — often 3 months to 1 year |
| Life Insurance | N/A | Tax-free principal; ordinary income on delayed interest | None — lump sum or settlement options |
General reference only — your situation depends on plan documents, state law, and beneficiary type. We model the specifics with you.
How It Gets Done Wrong
Cashing out a six- or seven-figure pre-tax IRA in a single year can push the entire distribution into the top federal bracket — plus state tax, plus NIIT. Proper planning across the 10-year window can preserve hundreds of thousands of dollars.
The SECURE Act 10-year rule on inherited retirement accounts and the 5-year rule on non-qualified annuities are unforgiving. Miss an RMD and you face a 25% penalty on the shortfall. Most heirs don't even know the clock is ticking.
Heirs sell inherited stock or property using the decedent's original cost basis and pay tax they didn't owe. Inherited taxable accounts and real estate receive a step-up to date-of-death fair market value — embedded gains are wiped clean.
Commission-based brokers and insurance agents see inheritances as a payday — variable annuities, loaded mutual funds, structured notes. These products often serve the seller, not the heir.
Beneficiary designations override the will. A stale designation, an unfunded trust, or a wrong choice between per-stirpes and per-capita can route assets to the wrong people — or trigger probate that could have been avoided.
Lump sums get parked in cash for years, or dumped into a single concentrated position, or chased into whatever was hot last quarter. Inheritances deserve the same disciplined, tax-aware portfolio construction as the rest of your wealth.
The Rigden Approach
Our model is built to avoid the two structural traps that dominate the industry — high-fee active management on one side, cookie-cutter low-touch portfolios on the other. See how we sit between the two camps →
We're paid by you, not by product sponsors. No commissions, no kickbacks, no incentive to push the annuity or the loaded fund. The right answer is sometimes 'do nothing yet' — and we'll tell you that.
For inherited IRAs and 401(k)s, we model distributions across the full 10-year window — coordinating with Roth conversions, charitable giving, capital gains harvesting, and bracket management to minimize lifetime tax, not just this year's bill.
Inherited assets are integrated into a single, tactically-allocated portfolio built on low-cost index funds — not high-fee actively managed products. Allocations adjust as the macro environment shifts.
We work with your estate attorney and CPA to align titling, beneficiary designations, and trust structures — so the assets you eventually pass on don't repeat the same mistakes.
You work with an experienced lead advisor — not a call center, not a junior, not a separate planning team. With capped client books under 150, we have the bandwidth to handle inheritances with the care they deserve.
What We Handle
The work doesn't end when the assets transfer. The largest tax decisions on an inherited retirement account often happen in years 3 through 10 — well after most heirs have stopped paying attention.
The first 12 months set the tax trajectory for the next decade. We'll help you plan the whole arc.
