How will your beneficiaries be taxed when they receive an inheritance from you? In this video, Senior Financial Planner Allison Alley, CFP® from Pure Financial Advisors outlines how different types of inherited assets are (or aren't) taxed. Transcript: We recently got a question regarding how does the inheritance tax work. Well, there's a few different things that go into it. Three different taxes could come into play: ordinary income taxes, capital gains taxes, and then estate taxes. When it comes to ordinary income taxes, the accounts that could be inherited that might be subject to those would be retirement accounts. So if you inherit an IRA or a 401(k), once you start taking distributions from those accounts, you will be subject to ordinary income taxes on those withdrawals. Other accounts - anything not inside a retirement account , whether that's real estate, individual stocks and bonds, and mutual funds, etc. - there's really no tax when you inherit
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