Heirs need to do more than wait

On Behalf of | Apr 6, 2021 | Inheritances |

Reaping the benefits of an inheritance is not a sure thing. Receiving the proceeds or assets of an estate requires preparation. There are several ways to help your children plan so they have the opportunity of receiving the maximum benefits from their inheritances.

Investment property

This asset may pose special difficulties. Investment property is unlike an investment portfolio which may be divided among your heirs who can manage or spend it according to their own inclinations.

It is more difficult to divide investment property. Your children may disagree on its management.

With any real property, especially rental property, you should be objective and decide whether your children are able to work together, reach decisions and manage the property. It may be more realistic to leave this property to the heir who is competent and willing to manage it.

Other heirs may receive additional assets instead of receiving investment property. Your estate can also have provisions allowing children to buy out the interests of other heirs at a price set by an independent appraiser.

Appreciated assets

You can increase an inheritance by selling investments such as stock that has appreciated and account for a capital gain. There are other options that have tax advantages, however.

You may also sell other securities where there was slight or no appreciation. Keeping these shares of stock and passing them on to your heirs may allow them to receive the stock at their appreciated value upon receipt. That value becomes the new cost basis in those shares. There is no capital gains tax for the appreciation if your heir sells those shares.

Financial advisors

Financial advisors can explain your financial strategy and goals with your children. Accountants can also discuss your tax planning and whether it should continue after your death.

There are numerous ways to handle your portfolios. Your heirs should meet with your broker or a financial planner to review these strategies.

An attorney can help you devise an estate plan that meets your goals. They can also prepare the documents that will execute it.

 

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