Everything You and Your Family Should Know About Inheritance
Everything You Need To Know About Inheritance
Death will never be easy. The passing of a family member or friend is life changing and affects each of us differently. That being said, it's wise to plan ahead as your loved ones will still be able to flourish after you're gone. Make sure you and your beneficiaries understand all aspects of inheriting money or property.
1. What Is An Inheritance?
Inheritance, simply put, is the process in which family members or relatives receive ownership of a deceased persons belongings. The deceased would have set up an inheritance, will, or trust. If no beneficiaries were stated at the time of death, a probate court will determine how the best way to allocate assets. It's important to set up a will, trust, or inheritance so one can name heirs or beneficiaries clearly.
2. What Constitutes an Inheritance?
A few things can be inherited. More frequently, money or stock certificates will be passed down to beneficiaries. Investments, property, and other ventures can be inherited as well.
3. What is an Inheritance Tax?
Sorry, you can't even escape taxes when you inherit something or leave it behind. Inheritance taxes vary state by state so depending on where you live you'll be taxed when you receive inheritance money or property. The beneficiary is responsible for paying taxes on whatever is received. If you inherit property, be sure to find out if your state has an estate inheritance tax
4. What Should You Do with Your Inheritance?
Depending on what you've received, a lot. First, make sure you split any inheritance legally between other beneficiaries. Avoiding family drama, or legal battles, will only make your life easier. Inheriting money or property can be overwhelming, and "80% of inheritances are spent within 10 years". Planning your finances with a financial planner, or other professional, can alleviate confusion or stress.
5. Consider Your Inheritance
Financial situations aside, it's important to plan for your beneficiaries futures as well. If your parents left your kids money, set up a will for yourself, and a system that works for your children. Additionally, you can "give an annual exclusion gift of $12,000 per child - tax free - to an unlimited number of recipients every year" as well.
Research Estate Executors
If you are worried you might need outside help, find an estate executor.