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From Gift to Legacy: Maximizing Your Inheritance

Mallory Labik

October 7, 2025

Three generations of family.

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Inheriting assets, whether expected or sudden, can be a deeply emotional experience. Feelings of gratitude, responsibility, and uncertainty often come together in this moment. For women who are increasingly inheriting wealth as spouses, daughters, and beneficiaries, this can also be a turning point in your financial life. Research shows women are projected to inherit 70% of the $84 trillion in wealth transfers expected by 2045.1 Women already control one-third of total U.S. household assets over $10 trillion today a number expected to triple over the next decade.2 As lifespans lengthen, women are also more likely to outlive spouses and eventually manage family wealth on their own.

An inheritance represents more than money, it is an opportunity to build security, honor a loved one’s legacy, and strengthen independence. But without thoughtful planning, the impact can be fleeting. Here is how to approach this gift with clarity and purpose, so it supports both your present needs and future.

Accredited By:

Mallory Labik
Wealth Advisor
Mallory Labik
CFP®, CDFA®

Mallory is a wealth advisor at Fragasso who is dedicated to helping clients design a customized wealth plan unique to their goals and investment preferences. She specializes in working with women investors and those experiencing significant life transitions, such as divorce or the loss of a spouse. Mallory finds it especially fulfilling to guide individuals […]

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This article has been reviewed for accuracy by Fragasso's leadership team and accredited by Mallory Labik to help ensure the information reflects current financial planning and wealth management principles.

1) Pause and Reflect Before Making Big Decisions

Processing a loved one’s passing while managing their financial legacy is a delicate balance. One of the most valuable steps you can take is to pause and ask yourself: What requires attention right now, and what am I building toward? Women often balance multiple roles as caregiver, professional, partner, parent and it can feel urgent to make quick financial decisions. But pausing allows you to honor the meaning of this gift and envision how it can support your goals and priorities.

2) Build a Foundation for Long-Term Wealth

An inheritance can provide more than just short-term comfort; it can become the cornerstone of a secure financial foundation for years to come. For many women, this may also be the first time they control significant wealth directly. This is an opportunity to prioritize your own financial independence. Start by building a plan that balances your current priorities with your long-term goals.

That plan may include:

  • Retiring comfortably
  • Paying off outstanding debt
  • Gifting during your lifetime in a tax-efficient way
  • Funding multigenerational education
  • Expanding your philanthropic impact

The key is aligning your financial choices with a broader strategy that reflects the life you want to live and the legacy you want to leave.

3) Navigate Taxes Wisely to Preserve Your Inheritance

Many people are surprised to learn that inherited assets can come with complex tax consequences. Depending on what you have inherited, you could face a variety of tax implications, including:

  • Step-Up in Basis – Most inherited assets, like stocks and real estate, receive a step-up in cost basis to the fair market value at the date of death. This minimizes capital gains if sold soon after inheritance. However, this does not apply to all asset types (like retirement accounts).
  • Estate Taxes – If the decedent’s estate exceeds the federal exemption amount, $13.99 million per individual in 2025, federal estate tax may apply. Some states also have state-level estate or inheritance taxes with lower thresholds. Pennsylvania is one of them and the rate varies depending on who is inheriting the assets.
  • Inherited Retirement Accounts – Traditional IRAs and employer plans are taxable when distributions are taken. Most non-spouse beneficiaries must withdraw the entire balance within 10 years per the SECURE Act rules. There is no step-up in basis, ordinary income taxes apply as funds are distributed.
  • Income in Respect of a Decedent (IRD)– Some income-producing assets, like deferred compensation, final paycheck, or annuities, are taxed as IRD and do not get a step-up. These are taxed as ordinary income when received by heirs.

Without a thoughtful strategy, these tax obligations can erode what was meant to support your future. To protect what you have inherited and use it wisely, consider collaborating with a financial advisor and tax professional who can help you:

  • Structure withdrawals in a way that minimizes taxes over time and keeps you in a favorable tax bracket.
  • Rebalance or reallocate inherited investments for long-term growth and tax efficiency while considering your investment risk tolerance.
  • Implement charitable giving strategies that reduce your taxable income while honoring your values.
  • Evaluate trust options or asset titling techniques that can offer additional protection or tax benefits.

4) Protect What You Have Received

When receiving an inheritance, the first thought is often how it might be spent or invested. Women live on average 6 years longer than men, meaning inheritances often need to last longer. Protecting it is just as important as growing it. That may mean keeping assets in your name if you want to maintain legal control or reviewing insurance and legal safeguards to defend against unexpected risks.3

To ensure your inheritance truly supports your long-term security, consider these essential steps:

  • Make sure the inherited assets are properly titled and that your own beneficiary designations reflect your current intentions.
  • Review how inherited investments fit into your broader portfolio. What worked for someone else may not suit your needs or risk profile.
  • Understand how inherited assets could be exposed to creditors or lawsuits. Inherited wealth can unintentionally become vulnerable in business disputes, legal claims, or divorce.

Your inheritance deserves the same thoughtful protection as the care and intention with which it was passed on to you.

5) Secure Your Own Legacy

Receiving an inheritance is often a reminder that wealth is generational, and so is impact. Women often carry the responsibility of caring for both aging parents and children. This is an ideal time to review or create your own estate plan. Make sure your will, powers of attorney, beneficiary designations and trusts are up to date. If you have children or other loved ones who depend on you, now is the moment to plan how your wealth will support them, even long after you are gone. A well-crafted estate plan ensures your legacy, and your values continue in the lives of those you love.

An inheritance is so much more than a financial transaction. It is a bridge between the past and future. A chance to turn legacy into opportunity and opportunity into security. With intention, support, and a clear plan, this gift can fuel your dreams, protect your family, and build something lasting.

You do not have to do it alone. A trusted financial advisor at Fragasso can walk with you through every step of this journey, helping you transform uncertainty into clarity, and inheritance into impact.

Sources:
1 https://www.cerulli.com/press-releases/cerulli-anticipates-84-trillion-in-wealth-transfers-through-2045
2 https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management
3 https://www.cdc.gov/nchs/products/databriefs/db521.htm

 

Managing an Inheritance: What Women Need to Know

What should women do first when they inherit money or assets?

The first step when inheriting assets is to pause and reflect before making major financial decisions. Inheritance often comes during an emotional time, and rushing choices can lead to mistakes. Women should focus on immediate needs, then work with a financial advisor to create a plan that balances short-term priorities with long-term goals such as retirement, debt repayment, or education funding.

How can women use an inheritance to build long-term financial security?

An inheritance can be more than short-term financial relief; it can serve as the foundation of lasting wealth. Women can strengthen financial independence by creating a strategy that includes investing for growth, paying down debt, and planning for retirement. Aligning the inherited wealth with personal values, such as philanthropy or multigenerational planning, helps turn the inheritance into a tool for financial security and legacy building.

What tax considerations come with inheriting assets?

Taxes on inherited assets can vary depending on what is received. Many assets, like real estate and stocks, get a step-up in cost basis, which reduces capital gains taxes if sold soon after inheritance. However, inherited retirement accounts are taxable when distributions are taken, and most non-spouse beneficiaries must withdraw the full balance within 10 years under current IRS rules. Some states, including Pennsylvania, also impose inheritance taxes. Working with a financial advisor and tax professional can help women preserve more of their inheritance and minimize tax liability.

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