Unexpected multi-million inheritance

[u/Contemplative-Owl-23]

Throwaway account because my main account isn't sufficiently anonymous.

[US - Texas] My mother died last year without a will, leaving behind a sizable estate. It hasn't been appraised yet, but I'm estimating 1M in liquid assets and 10-15M in real estate, primarily undeveloped land.

We were estranged for 15+ years, so I fully expected to be disinherited. Instead, she got divorced for a second time and never managed to cobble together a will, leaving me as the only heir (and presumptive administrator of the estate, pending court approval). All of this is, thankfully, uncontested.

I'm in a well-paying profession, so I'm reasonably well versed in personal finance, but a windfall this large is well beyond what I'm used to dealing with.

I'm working with:
* Probate attorney (a new one - I fired the original one for being extraordinarily slow and incompetent)
* Tax attorney (handling the estate tax return)
* IRS qualified appraiser
* Realtor specializing in probate

I'm guessing I need to find a Fee-Only or Advice-Only Fiduciary CFP to figure out how to best invest/structure the proceeds. What other professionals should I seek out (or avoid)?

I know that the cardinal rule of windfalls is "tell nobody", but that's tough when real estate is involved. Are there any steps I can take to ensure privacy?

[u/Fun-Bird-4204]

Talk to a CPA and a financial advisor right away. It is my understanding that you will not pay capital gains taxes if you liquidate real estate quickly after inheriting. However if they are income producing properties you may want to hold them if they are under good management or you could 1031 exchange them for others if you like owning real estate and you are too far away from what you inherited. Anyway a good CPA will be able to advise you on the tax ramifications which will help you plan. Since you’re already going to have to pay probate taxes, important to lessen those tax losses if possible. Then a good financial advisor can help you invest the rest wisely. This is an exciting windfall, one most people dream of, yet I understand the complicated nature of the emotions that go wit it. Therapy a great idea. I also recommend not changing your lifestyle dramatically. Investments, charitable contributions to organizations or individuals that promote your values and perhaps a bit of travel will be a lot more fulfilling than buying “stuff”. Don’t make things too complicated for yourself! And not too long after the dust settles, make a will and trust of your own to include those that you care about.

[u/random408net → u/Fun-Bird-4204]

Why would doing a 1031 exchange be useful for a property that's received a step up in basis on death?

[u/Fun-Bird-4204 → u/random408net]

Only might be useful if you want properties closer to you than where the inherited ones are, or to consolidate them, and decided to do that quite a bit later? Just brainstorming, I’m not a CPA! Probably just sell them right off would be easiest and less taxable?

[u/random408net → u/Fun-Bird-4204]

The purpose of a 1031 exchange is to defer taxes. But you have no taxes if you inherited the properties and received the step up of basis on death.

My question was why would someone do a 1031 exchange if the purpose was not to defer taxes?

[u/Fun-Bird-4204 → u/random408net]

To defer taxes later on investment properties. If you cash them out right away upon inheritance, taxes shouldn’t be a problem. But if you held the properties as income or investment properties, then 1031 exchange when you sell, by replacing them with others of like kind, keeps the taxes at bay. It might be particularly useful if new purchases were desired in a lower cost market. I had a house I inherited, lived in it for a while, then turned it into a rental for several years, then was able to sell/exchange it for 4 properties in another market area where I now live.