What You Should Know About Passing on Your Wealth

No matter how old you get, there's something wonderful about a grandparent reaching for his wallet to give you a few dollars to "spend on anything you’d like." Far more valuable than the money is the expression of love.

If only every transfer of wealth from one generation to the next were that simple. But the reality is that even the most straightforward inheritance requires preplanning, myriad legal forms, and careful consideration of tax implications.

It's easy to procrastinate on this type of planning. But the penalty for not having all your ducks in a row will fall squarely on your heirs. Not only can there be a delay of months or even years in transferring the funds, but during that time your loved ones will most likely have to hire attorneys and CPAs to straighten everything out. And their fees can significantly reduce the value of what’s ultimately passed along. Your hard-earned money will go to people other than those you intended.

Many people who love their children and grandchildren are unaware of the major headache they could leave for their heirs because of insufficient planning. 

Personal finance writer Dawn Allcot has compiled a list of the documents that need to be in order for a smooth transition to your heirs. They fall into three basic groups.

• Legal Documents. These include a will, trust, healthcare directives, and power of attorney.
• Financial Documents. Among these are bank account and retirement account statements, tax returns, real estate deeds, car titles, and life insurance policies.
• Information Access. Make a list of online accounts and their username/password, and PIN if required. This list should also include passwords to computers and numeric passkeys to phones and tablets.

For some of these documents, like setting up a trust—which may make transferring assets go more quickly—you will need to talk with an attorney. Other documents and information just need to be organized and in a place your heirs can readily access.

Preparing to pass your wealth along to your heirs can be intimidating and complicated. Maybe that’s why we tend to procrastinate on the specifics. But a great place to start is by talking with our advisors. We can help you determine your wishes on a multitude of details. In addition, advise an attorney and/or CPA to assist you in making informed tax decisions.

 

1. http://go.pardot.com/e/91522/ds-you-need-smooth-transition-/96nscp/2802808778/h/-Yxg2xqXRPb1efYC4LLnD8RYQuVwB4nbHSBsbYqDyag