To cash an inheritance check, the executor should deposit it into a dedicated estate bank account using letters testamentary. Beneficiaries usually cannot cash these checks directly; they must receive funds from the estate account. For small, non-probated estates, a Small Estate Affidavit, death certificate, and ID may be required.
Usually, the executor or personal representative of the estate is the one who can deposit or cash an estate check. This is the person the court has officially appointed to handle the deceased person's financial matters. If you're that person, you're basically the “authorized signer” for the estate.
The best place to deposit the large cash inheritance is in a federally insured bank or credit union account. Putting the inheritance in a savings account is a good option for the short term.
Cash a check at a retailer that cashes checks (discount department store, grocery stores, etc.) Cash the check at a check-cashing store. Deposit at an ATM onto a pre-paid card account or checkless debit card account.
Ideas for what to do with your inheritance
You may have the opportunity to improve your finances, catch up on some bills, or build an emergency fund, for example: Pay off high-interest debt. Create an emergency fund of at least 3–6 months of essential expenses. Revisit your investment plan with an advisor.
Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source.
Cashing a deceased person's check in a personal account can be interpreted as misappropriation, even if the money eventually goes to the rightful heirs. If the estate has already gone through probate or was formally closed, depositing new funds could trigger the need to reopen the estate.
An Overview. The short and simple answer is YES! You can transfer the inheritance to someone else, but remember to do this: you need the ownership. First, you must legally inherit the inheritance; transferring it becomes entirely yours once it's in your name.
Once appointed as administrator, you'll receive Letters of Administration from the court. These documents prove your legal authority to handle estate matters and will allow you to open an estate bank account where you can deposit the settlement check.
Sometimes, what to do with an inheritance is as much about what you should not do with your inheritance money.
The "7-year inheritance rule" (primarily a UK concept) means gifts you give away become exempt from Inheritance Tax (IHT) if you live for seven years or more after making the gift; if you die within that time, the gift may be taxed, often with a reduced rate (taper relief) applied if you die between years 3 and 7, but at the full 40% if you die within 3 years, helping people reduce their estate's taxable value by giving assets away earlier.
The best place to deposit the large cash inheritance is in a federally insured bank or credit union account. Putting the inheritance in a savings account is a good option for the short term.
You generally cannot cash a check not in your name directly, but the original payee can endorse (sign over) the check to you, allowing you to deposit or cash it, though most banks have strict policies and may require both parties present or prefer the payee deposits it into their own account first. This process, called a third-party check, involves the payee signing the back, writing "Pay to the order of [Your Name]," and you then signing below that, but it's risky and often rejected due to fraud concerns.
A Deed of Variation is a legal document that allows you to redirect all or part of your inheritance to someone else or a charity. Unlike disclaiming, using a Deed of Variation gives you control over who receives the inheritance instead of you.
Any cash or check transactions exceeding $10,000, or a series of smaller transactions designed to avoid reporting thresholds (“structuring”), will be reported to the IRS by banks as required by the Bank Secrecy Act.
In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate. It's a progressive tax, just like the federal income tax system. This means that the larger the estate, the higher the tax rate it is subject to.
You can typically inherit a very large amount from your parents without paying federal tax, as the federal estate tax exemption is around $15 million per person for 2026, meaning only estates larger than that pay tax, not you directly. While you generally don't pay income tax on inheritances (except for pre-tax retirement funds like IRAs/401(k)s, which are taxed as income when withdrawn), some states have their own estate or inheritance taxes with much lower thresholds, affecting a smaller portion of wealth.