By: Kevin Jagroop
An estimated $124 trillion will change hands over the next 25 years as older Americans bequeath estates to family and philanthropic causes. This shift is known as the “Great Wealth Transfer,” and Gen X is set to inherit the largest share of it over the next decade at $14 trillion, followed by millennials at $8 trillion.
Planned with intention, this opportunity can be a financial head start, helping to build resiliency for life’s unexpected moments and turning a single transfer event into lasting financial health for multiple generations. However, an unplanned transfer that doesn’t involve coordination with the original tax, legal and wealth professionals who helped build the estate could lead to tax liabilities and even family disputes.
To further complicate things, an inheritance may also come with feelings of grief and concern; these can exist alongside cash pressures created by administrative demands and new financial planning decisions that arrive all at once.
And when heirs aren’t ready to sell – or it’s simply not the right time to do so – a strategic wealth transfer plan that borrows against new assets while considering tax implications and long-term goals may help satisfy cash needs and keep the inheritance intact. With the right strategy, a moment of transition becomes an opportunity to build lasting wealth rather than a trigger for irreversible decisions.
Here are a few practical guardrails that can help you, with the help of your legal and tax advisors, weigh the true trade-offs of selling inherited assets and understand when borrowing against those assets may provide some breathing room.
First things first: Sit with the meaning of your inheritance. The most important work at this stage is reflection, not transaction. Ask yourself the following questions:
- What did this wealth mean to the person who left it, and what do I want it to mean going forward
- What are my true near-term cash needs – taxes, legal and funeral costs, property upkeep – versus my long-term goals, such as buying a home, paying off debt, starting a business or supporting a growing family
- Which of these assets are liquid, and which are illiquid, concentrated or difficult to sell quickly without concessions
- What is my realistic timeline, and what pressures are truly urgent
- What would success look like a generation from now
he common theme here Slow down. Selling too soon or at the wrong time can shrink what’s left to invest and quietly weaken a family's long-term wealth. Indeed, resisting the urge to make irreversible decisions under emotional or time pressure is often the single most valuable thing an heir can do.
Understanding your complete financial picture – and what you want to achieve long term – should precede any decision to sell. Two common scenarios illustrate the hidden cost of moving too quickly.
Consider a hypothetical situation in which you inherit the home where your extended family spends its summers. Selling it may generate a down payment for a new home, but there’s timing and market risk to consider, as well as potential family dynamics – such as differing opinions among relatives over whether to sell in the first place. Triggering a big capital gains tax bill is unlikely, thanks to the stepped-up basis rule on inherited property – but a sale might not be financially prudent if real estate values are down or if the home is part of a broader, diversified portfolio. A sale might be even more complicated if the home is jointly owned with other relatives.
Now, consider a different hypothetical scenario in which you inherit a brokerage account holding a portfolio of stocks, but you need cash quickly – perhaps for a time-sensitive opportunity or an unexpected expense. Selling those investments could generate the funds you need, but doing so may mean stepping away from assets that have the potential to keep growing over time. Depending on how the portfolio has performed, a sale could also affect the balance and diversification of your overall holdings. If you need cash now, there may be ways to access liquidity without making an irreversible decision.
In both scenarios, the assets themselves – the family home and the brokerage portfolio – may hold the answer to the cash flow challenge. Before making an irreversible sale, heirs can often borrow against the very assets they’ve inherited to meet near-term needs while keeping the inheritance intact. This is precisely the idea behind the "liquidity-without-liquidation" strategy explored below.
Instead of rushing to sell inherited assets, a "liquidity-without-liquidation” approach allows you to borrow against the value of eligible assets. There’s both an immediate and a long-term benefit: You have access to cash, and your wealth remains invested in assets that have the potential to grow in value over time.
This strategy can be useful for avoiding forced sales, funding known expenses and bridging timing gaps (such as covering estate settlement costs or buying time to make a thoughtful diversification plan).
That said, borrowing has associated costs and eligibility requirements that are important to evaluate on an individual basis. If the value of what you’re borrowing against falls below a certain threshold, you may have to add collateral or pay back some of the loan sooner than expected (sometimes called a margin or collateral call). This consideration can be fine-tuned by diversifying collateral in the brokerage account, either by carefully converting to managed strategies with a bias to diversification or by employing smart hedging strategies. And, if you already plan to sell an asset as part of a broader estate or wealth transfer strategy, a loan may simply not be the most fitting tool for that moment in your plan.
Before using this approach, however, it helps to clarify your timeline, establish a repayment plan, select the most appropriate loan option for your circumstances and align it with your overall investment strategy.
4 loan options
Several lending tools let you borrow against your assets, helping you preserve your inheritance rather than spend it down. The right choice depends on the type of assets you've inherited. Here are four worth knowing about.
- Securities-based lending: A securities-based loan (SBL) is a line of credit or loan backed by eligible marketable securities – such as stocks, bonds or mutual funds – in a taxable brokerage account. Interest rates are often lower than on traditional loans and lines of credit, and interest-only and other repayment arrangements can offer flexibility. A borrower’s advance rate, or credit limit, depends on the institution and type of holdings, and may be more generous for investors with high-value, diversified portfolios.
- Real estate lending: If selling an inherited property isn’t the right move because of market conditions, family considerations or personal goals, a home equity line of credit (HELOC) or loan can unlock cash from the property to cover ongoing costs such as maintenance or insurance, or to facilitate a buyout among heirs. Borrowing is typically limited to 80% of the home equity and requires an appraisal. Home equity loans provide a lump sum and are repaid with fixed interest rates, resulting in fixed monthly payments. HELOCs are best for borrowing on an as-needed basis – such as for variable or unpredictable estate settlement costs – and can minimize the risk of overborrowing.
- Business-related lending: Inheriting a business, or a stake in one, can trigger legal costs, taxable events, partner buyouts and long-term succession plans. Asset-based lending, business lines of credit and working capital loans can be leveraged to cover funding gaps.
- Specialty/alternative asset lending: Inherited collectibles, such as fine art and luxury automobiles, can also be used as collateral for lending and may offer additional benefits, including the potential for interest paid on the loan to be deducted from taxable investment income, subject to IRS rules. It’s worth noting that collectible assets can be subject to valuation fluctuations.
A thoughtful lending strategy can help preserve multigenerational wealth. Heirs should first align on their goals for inherited assets – whether to honor the original intent of the inheritance, to diversify investments or to fund life goals. Professionals such as estate attorneys and tax advisors can help clarify these objectives while balancing short- and long-term needs, such as liquidity needs, ensuring there are no downstream consequences. Their real value emerges when their work is coordinated across trust and estate, investments, taxes, and lending rather than treated as separate silos.
Families setting up estate plans for future generations can help smooth the transfer by bringing heirs into the planning process early and communicating their intentions for specific assets. Clear communication is a must when multiple heirs share ownership of an asset they wish to use as collateral. All parties should agree on who receives the loan proceeds, who is responsible for repayment and how decisions will be made.
Here’s a quick planning checklist for families integrating lending strategies into a wealth transfer plan:
- Gather your team of professionals, including attorneys and tax advisors.
- Align on goals for the inherited assets.
- Create an inventory of assets.
- Map each heir’s cash needs and the timing of those needs.
- Model tax deadlines.
- Stress-test collateral values and rates on lending options.
- Set guardrails for borrowing.
The Great Wealth Transfer will be remembered not just for its scale but for the outcomes families create from it – either a smooth, values-driven transition that strengthens multiple generations, or a reactive handoff that invites taxes, complexity and unnecessary strain.
A critical part of a smooth transfer is a thoughtful borrowing strategy: When the time isn’t right to sell, borrowing against eligible assets lets heirs meet real-world cash needs and address timing gaps while keeping their inheritance invested and intact.
Selling inherited assets should occur only after careful planning and consultation with co-heirs, legal counsel and tax advisors. A J.P. Morgan advisor can help you develop a holistic plan.
