Question 1

How should I invest an inheritance?

Accepted Answer

Start by setting aside 3–6 months of expenses as an emergency fund, then pay off any high-interest debt. Invest the remainder in a diversified portfolio of low-cost index funds aligned with your time horizon. Avoid making big lifestyle changes immediately — give yourself time to plan before spending a large windfall.

Question 2

What is the federal estate tax exemption?

Accepted Answer

The federal estate tax exemption is the amount a person can pass to heirs free of estate tax. As of 2024, the exemption is $13.61 million per individual ($27.22 million for a married couple). Estates below this threshold owe no federal estate tax. The exemption is scheduled to drop roughly in half after 2025 unless Congress acts.

Question 3

What are the rules for inherited individual retirement accounts (IRAs) under the SECURE Act?

Accepted Answer

Under the SECURE Act of 2019, most non-spouse beneficiaries who inherit a traditional or Roth individual retirement account (IRA) must withdraw the entire balance within 10 years of the original owner's death. Spouses, minor children, disabled individuals, and beneficiaries less than 10 years younger than the deceased are exempt and may still use the old stretch rules. For inherited traditional IRAs, each withdrawal is taxed as ordinary income.

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