c. If the assets you inherit were inside retirement accounts, such as an IRA, 401(k), or other such investment, then there are other rules, but broadly speaking (a) you may be required to take annual distributions, and (b) those annual distributions will probably be taxed as ordinary income, like you just got paid more at your job.
Everything you shared was extremely helpful, thank you very much. I didn't realize specifically about C. I was assuming (based on nothing) that I would just be able to sell the stocks in the 401k and IRA and do whatever I wanted to with that money. I wouldn't have even known to ask questions about the different items you shared with me. Is there a good website or resource you can point me to to educate myself further. I'm really good at research and understanding things, but I've never considered anything inheritance wise before so I'm starting with very little knowledge.
You're welcome.
Assuming, in general, is not a good thing. It can be especially damaging when dealing with inheritances, taxes, and legal matters. I encourage you to go slowly and only take action once you are fully certain that you understand the implications of your actions.
Just like in your own 401(k) or IRA, you can certainly sell and buy assets as you see fit (after you receive the assets) inside the account generally with no tax consequence. Although, you should read up on wash sale rules, as those may affect you.
However, withdrawing money from the 401(k) or IRA will, again very generally speaking, result in that withdrawal being taxable to you at ordinary income tax rates in the year in which you make the withdrawal.
I've accumulated what I know over decades of reading various websites. Many websites are approximately correct but not exactly correct. I would encourage you to go to the gold standard sources for information, which are the actual federal and state laws, and the IRS website, including their forms and publications. They are often thick reading, but if you like to research and have a reasonable intellect, they are frequently reasonably understandable.
As a start, you could read up on federal estate taxes on the IRS website. It probably has a publication about that. Try this link, which is the kind of search I frequently do:
https://www.google.com/search?q=estate+taxes+site:irs.govIf you choose to research using other more readable websites, I would encourage you to find ways to evaluate the quality of the source before relying on anything they say. There are sites I trust based on this approach but I wouldn't want you to substitute my experience and judgment for your own.
Finally, as mentioned before, I think it is a reasonable strategy to read as much as you can for free, and then go to a reliable, local, expert in your area with your advanced questions. I personally would want someone who is fee-based, fiduciary, recommended, and has appropriate certifications - for me that is a partner in a local, highly regarded CPA firm who focuses on taxes.
On this last note, you'll need to develop enough of an understanding to know the difference between legal issues and tax issues and hybrid issues that span both areas. In your situation, you've probably got questions and need to learn about both areas, and it would be good for you to be able to figure out which expert(s) to go to with which questions.