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What to Know When You Inherit Assets

Getting an inheritance can be exciting and possibly also overwhelming at the same time. There are a few things to know about inheriting assets because depending on the type of asset, you may need to plan for and manage them differently.

Five Things to Know About Accepting Your Inheritance

1.      Cash. Money from an estate that is liquid will be sent to you as a beneficiary in the form of a check. You are free to deposit this money and it will not be taxed as ordinary income. Depending on the amount you may want to meet with a financial advisor to determine next best steps about investing the cash so that you can save and earn interest on it.


2.      Retirement Accounts. This may be one of the most complicated assets that is transferred from the decedent’s estate to the chosen beneficiaries. Traditional retirement accounts (IRAs) and 401(k)s are taxed as income, while Roth IRAs are not. Under the new Setting Every Community Up for Retirement Enhancement (SECURE) Act, assets inherited from retirement accounts must be distributed within ten years if the IRA owner died on or after January 1, 2020 (unless you are a spouse). Some estate plans will be structured to protect these retirement assets by requiring them to be placed into either a conduit trust or an accumulation trust. When this is the case, the beneficiary will receive distributions from the trustee managing the trust.


3.      Real Estate. Many real estate transfers are done outside of the probate process. This is determined by the way the deed is titled. Joint property passes automatically to co-owners. Individually owned property may be part of the estate and pass according to the terms of the will. Real estate will have a step-up in basis adjustment in value upon the death of the owner.


4.      Securities. Securities will be re-titled and also subject to a step-up in basis adjustment of the value upon the death of the owner.


5.      Life Insurance. Proceeds bypass probate and go directly to the named beneficiary in the form of a check from the insurance company unless the decedent’s estate was named as the beneficiary. These proceeds are typically tax-free to the recipient.

Receiving an inheritance may be a good time to schedule an appointment with a financial advisor, CPA and estate planning attorney.

Our Estate Planning Process for North Carolina residents: 

You will receive an email with a questionnaire link. Complete and submit prior to your consultation and the $350 fee will be waived.

Meet with an estate planning attorney and learn all the different strategies that can help you achieve the outcomes you desire.

Choose your plan based on your budget.

Pay half of the plan fee and schedule your legacy interview and signing ceremony.

At signing, pay the balance owed and get your plan along with the peace of mind knowing you protected everything you own and everyone you love! Schedule Now!


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