If you inherit a large amount of money, take your time in deciding what to do with it. A federally insured bank or credit union account can be a good, safe place to park the money while you make your decisions. Paying off high-interest debts such as credit card debt is one good use for an inheritance.
The key to making the most of the money is to put it somewhere to earn interest or to invest it – if you're comfortable with the risks associated with this. The main questions you should be thinking about are when you might need the money, how long you can put it away for, and what level of risk you are happy with.”
Excess Gifts Require a Tax Form
That's because in addition to the $19,000 annual exclusion, there is a $13.99 million lifetime exclusion, per person, for gift and estate taxes as of 2025. “The excess amount goes against the lifetime exemption,” Laginess says.
Deposit the money into a safe account
Your first action to take when receiving a lump sum is to deposit the money into an FDIC-insured bank account. This will allow for safekeeping while you consider how to make the best use of your inheritance.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.
The worst things you can do with an inheritance are spend it on assets you can't maintain, sit on it, or invest it all in one place. The wisest thing you can do is speak to a financial planner, preferably before you even inherit the money.
That said, an inheritance of $100,000 or more is generally considered large. This is a considerable sum of money, and receiving such a windfall can be intimidating, especially if you have limited experience managing excess funds.
A financial advisor can help you put an estate plan together to protect your assets for your family. 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.
Local banks or credit unions
Visit your local branch and talk to a teller to deposit your cash. Different banks might have varying policies on the maximum amount of cash you can deposit at once, so be sure to check with your local bank beforehand.
A cash deposit of more than $10,000 into your bank account requires special handling. Your bank must report the deposit to the federal government. That's because the IRS requires banks and businesses to file Form 8300 and a Currency Transaction Report, if they receive cash payments over $10,000.
Do you have to report it? The rule around individuals who receive an inheritance is no, you don't. But the bank is going to report it, and that's good enough. So, when you get your inheritance, the real plan is to now plan your estate.
In most cases, an inheritance isn't subject to income taxes. The assets passed on in an investment or bank account aren't considered taxable income, nor is life insurance. However, you could pay income taxes on the assets in pre-tax accounts.
Methods Executors Use to Mail Inheritance Checks
These checks are typically issued after the probate process is complete and all debts and taxes of the estate have been settled. Executors are responsible for ensuring these checks are delivered securely and efficiently after the probate process.
While it is legal to keep as much as money as you want at home, the standard limit for cash that is covered under a standard home insurance policy is $200, according to the American Property Casualty Insurance Association.
A check or money order provides a secure way to give money. Your gift can be tracked and voided if lost or stolen, which offers an added layer of safety. Another benefit is the convenience. You can write a check from your bank account and money orders are widely available at banks, retail stores and more.
The accounts we recommend for parking your cash are high-yield savings accounts, money market accounts, certificates of deposit, short-term Treasury bills and notes, and money market funds. When comparing your options, consider the rate of return and accessibility of your money, among other factors.