A Texan’s Guide to Inheriting Money

Think before you spend.

Published November 2, 2026

An inheritance is a welcome financial boost, but it often comes at an emotionally difficult time. This gift can come in the form of cash, a retirement account, investments, property, or a combination of all the above. Deciphering what you have — and what to do with it — can be overwhelming.

Before making any big moves or plans, get a solid understanding of what you’ve inherited and the financial red tape that may come with it.

Do You Need to Pay Taxes?

The good news is that Texas doesn’t impose an inheritance or estate tax, and federal estate taxes generally only impact large estates. (In 2026, the federal estate and gift tax exemption is $15 million per person.)

Generally, inheritances are not considered taxable income for beneficiaries. But keep in mind: Inherited assets can create taxes later. For example, interest, dividends, or rent payments generated by inherited property may be taxable. Also, selling inherited investments can lead to capital gains or losses.

Understand What You’ve Inherited

A monetary inheritance can come in many forms, ranging from cold, hard cash to retirement accounts. Some of the most common forms also include:

Certificates of deposit, or CDs
Stocks, bonds, or mutual funds
Life insurance proceeds
U.S. savings bonds
Annuities
Business ownership interests

Knowing what, exactly, you are inheriting can help you determine the next best steps. Often, a real estate attorney or financial planner can help you make sense of what you’ve inherited and understand any associated rules.

Explore Your Options

The best course of action is to first define your financial goals. Making this determination can help you decide what to do with the money.

It can be tempting to make plans (and a few daydreams) for your inherited bounty but think before you spend. While there’s no “right” answer for what to do with inherited money, there are a few options to consider that can help it go further.

Build, or boost, a rainy-day fund.
Pay down debt.
Save for a new home or pay down your mortgage.
Add to your retirement accounts.
Stick it in a high-yield savings account.
Invest it.
Buy rental property.
Increase your long-term care or life insurance coverages, both of which can help protect your assets from future high medical costs.

Growing Assets, Shifting Insurance Needs

Greater assets can lead to greater liability concerns. If your inheritance has the potential to significantly increase your net worth and assets, you may want to think about investing in an umbrella insurance policy. Typically, umbrella insurance becomes a worthwhile consideration when your net worth, including your home, reaches about $500,000 .

Umbrella insurance can offer an extra layer of protection should your other policies (homeowners, auto, or farm and ranch) become exhausted after an accident. Your Texas Farm Bureau Insurance Agent can walk you through the pros and cons of an umbrella insurance policy to help determine if it’s a good fit for your new needs. Brush up on these umbrella insurance FAQs beforehand.

Revisit Your Own Estate Plan

After navigating the inheritance process, it’s a good time to get your own affairs in order. Take small — but essential — steps such as safely storing important documents and updating your beneficiaries on insurance policies and financial accounts.

If you haven’t already, create a will or update what you currently have on file. Spare your loved ones from navigating Texas’ succession laws should you die without a will in Texas.

As hard as it is to think about, planning ahead is one of the kindest final gifts you can leave loved ones. Take steps to prepare your family for life after loss.