Estate Planning Best Assets to Transfer

Best Assets to Inherit

Some assets make better inheritances than others if you’re planning to leave your heirs any sort of inheritance with your estate plan.  Simplifying what you own in anticipation of death can be helpful for your family. Otherwise, someone may be left taking care of the more complicated property when you die, which may coincide with an emotional period for certain family members who may also be the persons in charge of your estate and possibly heirs., With careful planning, you can prevent the emotional and even family-destroying fights that can happen with some of the worst assets to inherit. If you’re able and willing to do this type of advanced planning for your heirs, here are the best assets to leave as an inheritance. 

Cash

Cash is the simplest asset to transfer. Your heirs immediately know how much it is worth. Cash can be easily divided between the heirs, as opposed to other assets such as the ownership of real property, certain personal valuables, which may further need to be liquidated into cash to settle the estate and divide the assets according to the terms in your will, and don’t have to do any hard work  such as something like real estate, which can take months to sell, costs money to liquidate, and then may be added to the remaining cash to be divided. Likewise, if you have cash saved in several different banks, you can make life even easier for your heirs by consolidating, especially in your later retirement years. |Remember to set limits since FDIC insures up to $250,000 in individual deposit accounts and up to $250,000 for each person’s share of joint accounts, and where accounts are similarly covered by NCUA which protects each credit union member.

Near Cash Alternatives

Methods for having “near cash” and that maybe just as effective as cash may be worth further consideration. You should be considering life insurance or  increasing life insurance on yourself. When you pass away, the life insurance company will pay your heirs the death benefit in cash, according to the beneficiary instructions you list in the contract. In addition, this bypasses probate, so your heirs don’t have to wait for the courts verification under your will before distributing funds. Receiving the cash from an insurance policy is an uncomplicated process. Your heirs typically just need to present your death certificate to the insurer and fill out a short form. Plus, your heirs will receive the payment income-tax-free, though the death benefit is added to the value of your estate and could be charged estate taxes.

Also, savings bonds, money market funds, and Certificates of Deposit  are liquid inheritances that your heirs can easily divide and cash out right away; however,  heirs may forfeit some interest in cashing in a CD earlier than its maturity. 

A “payable upon death,” designation for bank accounts, which also bypass probate, can be helpful and has the additional feature that funds cannot be taken by another person before death. This is different to a joint account where the rights are from the day the funds go into the joint account. Therefore, as opposed to joint account, a POD account is safer than making your heir a joint owner on the account because otherwise, they would be able to drain the funds while you’re still alive.

Brokerage Accounts

Investments made through a taxable brokerage account such as stocks, bonds, and mutual funds, Have attractive inheritances benefits. Like cash, ownership  and the ownership interest are divisible. Since they are easy to divide, the ease of verification of their value they are easy for the person you have in-charge to administer your estate. The value is verifiable by the heirs because your heirs can see the market price of these publicly traded investments. In addition, publicly traded investments are easy to sell, convert to cash, even distributed in-kind to the heirs.

On top of it all, your heirs could receive a significant tax benefit on these inheritances.  If you hold these investments until you die, your heirs receive from the estate, a step-up-in-basis, which means the investment basis goes up to the market value on the day you die. Estate value is measured as of the date-of-death. Additionally, step-up-in-basis treatment also applies to real estate, an appealing tax break if you’ve owned your home or other property for many years.

Real Estate Difficulties

Unlike liquid assets, real estate can be a more complicated and expensive asset for your heirs. With respect to heirs and dealing with personalities, it is  more likely to lead to arguments. One way around this problem is to direct the executor of your will to sell the property upon death. Heirs then receive the cash from the sale without owing capital gains taxes. While these tend to exist, they tend not to be the better assets for managing the estate upon death.