The transfer of wealth between generations is creating a growing need for inheritance financial planning. Cerulli Associates estimates that $124 trillion will be transferred through 2048, with $54 trillion expected to move to heirs and charities over the next decade alone. For RIAs, this creates an opportunity to help clients make thoughtful decisions before a large inheritance changes their financial picture.

What Should Clients Do First After Receiving a Large Inheritance?

RIAs can start with a complete review of the inherited assets, the client’s existing investments, debts, cash needs, and long-term goals. Keeping liquid assets in a secure, low-risk account while this review takes place can give the client time to make decisions without unnecessary pressure.

This first-year approach is becoming increasingly important as more households receive substantial assets. The goal is not to delay every decision, but to separate urgent financial tasks from decisions that can be made later.

How Should RIAs Help Clients Handle Taxes and Liquidity?

Before investing an inheritance, advisors need to determine how much of it may be needed for taxes, debt repayment, or other short-term expenses.

Tax treatment depends heavily on the type of asset inherited. Many taxable investment assets receive a step-up in cost basis to fair market value at the owner's death, which can significantly reduce capital gains if the assets are subsequently sold. Inherited traditional IRAs, however, generally create taxable income when distributions are taken.

This difference can make the timing of sales and retirement-account withdrawals important. RIAs can coordinate these decisions with the client’s broader income, tax bracket, and retirement strategy rather than treating inherited assets separately.

What Should Clients Know About Inherited IRAs?

Inherited retirement accounts require particular attention because the rules can be more complicated than those for ordinary investment accounts.

Under the SECURE Act, most non-spouse beneficiaries who inherit an IRA from someone who died after 2019 generally must empty the account by the end of the 10th year following the owner's death. Depending on the circumstances, annual required minimum distributions may also apply during that period.

For a client in a high tax bracket, waiting until the final year to withdraw everything could create a large taxable distribution. Spreading withdrawals over several years may provide more flexibility, although the appropriate strategy depends on the beneficiary’s income, account type, and applicable IRS rules.

How Can RIAs Address Beneficiary and Family Issues?

An inheritance can also expose problems that have little to do with investment performance. Clients should review beneficiary designations on their own retirement accounts, insurance policies, and other assets after receiving an inheritance, particularly if the inheritance changes their estate plan.

Family dynamics can be equally important. Different heirs may have different financial needs, risk tolerances, or expectations about how inherited assets should be handled. RIAs can help clients establish clear goals and, where appropriate, coordinate with estate-planning attorneys and tax professionals.

What Other Areas Can Help RIAs Deliver More Client Value?

Inheritance planning is one example of how RIAs can provide value beyond traditional portfolio management. Securities class action recovery is another increasingly overlooked area. Securities class action settlements totaled approximately $8 billion in 2025, creating potential recovery opportunities for eligible investors.

Platforms such as 11th.com automate settlement monitoring, holdings matching, claim filing, and payout delivery. For RIAs, this provides another way to deliver value to clients without requiring advisors to manually monitor settlements and manage claims.

What Should RIAs Expect From Inheritance Planning in 2026 and Beyond?

As more wealth moves between generations, inheritance planning is likely to become a more important part of the RIA-client relationship. The strongest approach combines an initial pause, liquidity and tax planning, a revised investment policy, careful management of inherited retirement accounts, updated beneficiary designations, and attention to family dynamics.

FAQ

What should clients do first with a large inheritance?

Avoid major financial decisions immediately and begin with a review of the inherited assets, liquidity needs, taxes, and long-term goals.

How are inherited assets taxed?

Tax treatment depends on the asset. Many taxable investments receive a step-up in basis, while distributions from inherited traditional IRAs are generally taxable as ordinary income.

What is the 10-year rule for inherited IRAs?

Most non-spouse beneficiaries who inherit an IRA after 2019 generally must fully distribute the account by the end of the 10th year after the owner's death, although additional annual distribution rules may apply.

Why should clients revisit their investment policy after an inheritance?

A large inheritance can change risk capacity, liquidity needs, and portfolio concentration, making it important to reassess the client’s investment strategy.

How can family dynamics affect an inheritance?

Different goals and expectations among family members can create conflicts. Clear communication and coordination with estate-planning professionals can help reduce these risks.