Leaving an inheritance behind to children or loved ones is a goal that many retirees wish to accomplish. An inheritance is commonly cash value but can also include assets, like real estate. Leaving an inheritance is a great way to help secure your family’s financial future after you’re gone, but there are a few things to know when diving into the process.

Before You Begin

Before you decide to leave an inheritance consider your own needs during your retirement.Leaving an inheritance usually requires extra saving, so factor in your own life expectancy and future healthcare costs.1 You should make sure your own financial situation is in order before you set aside money for others. Consulting with a financial professional early in the process can help you put together achievable goals for an inheritance.

How Can I Give My Inheritance?

There are multiple ways to pass on an inheritance to loved ones. In most countries, inheritances are taxable. This means that the heir will mostly likely have to pay taxes based on the monetary value of the inheritance. There are a few ways to lower the taxation amount. Setting up your inheritance in a trust, giving a tax-exemption gift or making your children beneficiaries on a roth IRA are a few ways.2Utilizing life Insurance and tax-deferred variable annuities are other options as well.3 A situation that lowers the tax amount could have other stipulations that may or may not fit your situation. Discussing the best option with a financial advisor is a smart way to decide.

How Will It Be Spent?

Establish guidelines to avoid your loved ones from using their inheritance too quickly or for short-term buys. Carefully consider how you want the inheritance to be used by asking yourself questions: Do you want it to be used to pay for your grandchildren’s college? Help your kids buy a house or set them up for retirement? Will they be able to handle a lump sum? Know what you want to happen and discuss those plans with your financial advisor. In some of the methods used for distributing inheritances, there are ways to put guidelines on spending. Your financial advisor can help you set it up correctly to ensure the outcome will be what you want.

Creating a separate stock portfolio or passing down your current portfolio may be good option to give as an inheritance as well. To ensure that your portfolio can be inherited, discuss with an advisor about your account’s options. One of the most efficient ways to set up an inheritance is to consult with a financial professional. At Miramontes Capital our financial architects can assist you in this process to ensure the money you leave behind will get to where you want it to go.

“Leaving Inheritance To Children Easier Said Than Done.” Investopedia. Web.
“How to Leave an Inheritance to Your Children.” Internal Revenue Service. Web.
“Leaving Inheritance To Children Easier Said Than Done.” Investopedia. Web.

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Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.