California does not levy an estate tax on any estates, regardless of size.
Just deposit it. Things might go quicker and your bank will appreciate it if you were to call them ahead of time and tell them that you're bringing in a large cash deposit. Any transaction with your bank of $10000 or more will be reported to the IRS, but if it's a legal inheritance that should not be a problem.
Gifts and inheritance Personal income types
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.
This is a huge amount of money, and yet it is not even close to the amount someone your age would need to retire. (However, if you choose to, it could get you comfortably into your first home, which might be a good investment for you.)
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
Medium inheritance ($100,000)
If you receive a larger inheritance, first consider the recommendations above—fund an emergency savings account or pay off credit cards and loans. You can also use a portion of the money to pay off all or part of your mortgage or pay down student loan debt.
Immediately after receiving an inheritance, you should notify your local Social Security office.
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.
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.
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.
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.
$500,000 is a big inheritance. It could have a significant impact on your financial situation, depending on how it is managed and utilized. As you can see here, there are many complex, moving parts involving several financial disciplines.
According to the Federal Reserve data, on average, American households inherit $46,200. 1 However, this number is inflated by large amounts passed down in wealthy families. Here, we'll get into the numbers and explore how inherited wealth can impact your financial planning.
Inheritance checks are generally not reported to the IRS unless they involve cash or cash equivalents exceeding $10,000. Banks and financial institutions are required to report such transactions using Form 8300. Most inheritances are paid by regular check, wire transfer, or other means that don't qualify for reporting.
The best way to avoid the inheritance tax is to manage assets before death. To eliminate or limit the amount of inheritance tax beneficiaries might have to pay, consider: Giving away some of your assets to potential beneficiaries before death. Each year, you can gift a certain amount to each person tax-free.
There are four ways you can avoid capital gains tax on an inherited property. You can sell it right away, live there and make it your primary residence, rent it out to tenants, or disclaim the inherited property.
One of the most common issues with inheritance is the dispute over assets. When an estate's value is high, and multiple beneficiaries are involved, this can cause problems.
The best investment for your 400k depends on your financial goals, risk appetite, and time horizon. Mutual funds, individual rental properties, and tax-advantaged accounts like Roth IRAs are popular choices. There are also alternative options like investing in mortgage note funds.