Those who receive considerable assets from generous loved ones who passed away are usually appreciative but sometimes don't know what to do with their new-found wealth. Such situations can be overwhelming to beneficiaries, and concerns quickly surface about how much will be owed to the IRS. Residents of Texas and elsewhere may have mixed emotions about an Inheritance and the tax burdens associated with it.

Beneficiaries are responsible for taxes on any income they receive in an inheritance. There are different tax rules for annuities, investment accounts, IRAs and real estate. Tax burdens are usually minimal or can be reduced depending on the type of assets. It may be in the beneficiary's best interest to have a plan in place and consult with a professional to discuss taxes before taking control of the inheritance.

A better asset for inheritance is a Roth IRA. The earnings are never taxable, and after the death of the original owner, there is no penalty for early withdrawal. These accounts must be re-titled as an inheritance and liquidated during the beneficiary's lifetime. Withdrawals from annuity accounts are taxed as income, and owners have the option of turning these accounts into a monthly income stream income of lifetime payments.

Residents in Texas who receive an inheritance from a loved may have many unanswered questions about how to handle a gift like this. Consulting with an attorney who is experienced in handling concerns and tax questions is the first step. A knowledgeable lawyer can help develop a plan that will reap the best long-term benefits and provide peace of mind for his or her clients.