When you hold property or assets you plan to pass on to family members after your death, making plans that protect your beneficiaries can ensure they receive all of what you intended. According to U.S. News, your heirs may have to pay considerable taxes and fees on their inheritances when you do not plan properly, which can severely reduce the amount you intended to give.
If you want to protect your heirs, there are several tips you can keep in mind as you plan for both your future and theirs as well.
1. Create a will
If you have a variety of assets and die without a will, you may resign your beneficiaries to months of probate court, where a judge decides who receives what you left behind. Even if you let family members know your plans verbally, drawing up a will and having it legally notarized can protect their interests much more effectively than a verbal contract would.
2. Review beneficiaries often
Circumstances can change for your beneficiaries once you create a will, so it is wise to review each often and ensure that major life transitions do not affect what he or she receives. Births, deaths and divorce can all have a profound effect on any individual you name in your will, so review your named heirs at least once a year to avoid problems these changes can bring.
3. Create trusts
If you plan to leave one or more of your heirs a considerable amount of money or valuable property, you can protect them from heavy taxes and penalties by creating a trust as well as a will. Trusts offer a variety of tax breaks and back up the validity of your will in court.
Much of what you give your heirs while living is also free of taxes. As such, recipients are not obligated to report such gifts on their yearly tax returns.