The Best Ways to Leave Money to Heirs — Nationwide (2024)

FAQs

The Best Ways to Leave Money to Heirs — Nationwide? ›

One good way is to leave the inheritance in a trust. The trust can be set up with some provisions, such as making distributions over time. A trust can also remove the issue of probate, allowing the inheritance to pass without issue.

One good way is to leave the inheritance in a trust. The trust can be set up with some provisions, such as making distributions over time. A trust can also remove the issue of probate, allowing the inheritance to pass without issue.

There are 2 primary methods of transferring wealth, either gifting during lifetime or leaving an inheritance at death. Individuals may transfer up to $13.61 million (as of 2024) during their lifetime or at death without incurring any federal gift or estate taxes. This is referred to as your lifetime exemption.

To begin the inheritance distribution process, you must submit the will through probate. After the probate court reviews the will, it's authorized to an executor, and the executor then legally transfers all assets—again, after settling taxes and debts.

If you inherit $100,000, you have a lot of options. You can pay off your highest-interest debts, save money for emergencies, or give some to charity. You might consider using it as a down payment on a house or adding it to your child's college fund.

The trustee can write the beneficiary a check, give them cash, and transfer real estate by drawing up a new deed or selling the house and giving them the proceeds.

Who distributes money to heirs? ›

That's where an executor of estate steps in. An executor has the legal responsibility to enact the deceased's will, manage the estate and ultimately distribute money assets. Estate law is explicit about what an executor of will is allowed to do.

Research shows that the average person burns through their inheritance in about five years, unless it is invested properly. The worst things you can do with an inheritance are spend it on assets you can't maintain, sit on it, or invest it all in one place.

The death certificate for the person whose will you are named in. A copy of the legal will, if such a document is available. A document from the estate executor or administrator explaining who they are and their relation to the estate.

One type of trust that helps protect assets is an intentionally defective grantor trust (IDGT). Any assets or funds put into an IDGT aren't taxable to the grantor (owner) for gift, estate, generation-skipping transfer tax, or trust purposes.

Grantor retained annuity trusts (GRAT)

If the assets in the trust increase in value, any appreciation will also pass to the beneficiaries free of gift and estate tax. The owner or grantor gets back the principal.

With a living trust, you can put the assets in the trust's name and add your heirs as beneficiaries. This means that upon your death, the assets will transfer to your heirs according to your wishes. Trusts can avoid probate and assets are free from creditors, of course, until they transfer to your heirs.

A gift tax is a government tax imposed on those who give money or property to others in exchange for nothing (or less than total value). There is typically a tax-free gift limit to family members until a donation exceeds $15,000 (jumping up to $16,000 in 2022). In these instances, the IRS is usually uninvolved.

From this perspective, if you are inclined to give, you should gift as much as you can comfortably afford during your lifetime, while remaining aware of the available step-up in capital gain basis for inherited assets. So, gift your assets that have minimal gains and save your most appreciated assets for inheritance.

The most common way to give an inheritance before death is to write a will and designate specific beneficiaries. This may be done in one of two ways - either by leaving the property or money directly to the person who you want to get it or by placing it in trust so that it goes directly to them after your death.