How to Process Inheritance for Heirs

The process of inheritance for heirs is important in financial planning for your family or anyone else you choose as heirs.

Sheldon Harber, President of Asset Strategies, Inc. with office is St. Louis and Chicago has tips what you can do.

Q: Who gets what and when after death? Somebody invests money over a long period of time; they pass away – what happens at that point?

Sheldon: First of all, it depends whether this inheritance money is in a retirement account or what we would refer to as a taxable account. If we’re talking about money that’s in a traditional IRA, the assets pass by beneficiary to the surviving spouse. Then we have to ask whether or not the account owner before their death was taking the required minimum distribution required by the government from their account.

If they were, then the spouse would continue and when the spouse passes away, ineritance can continue to the children.

They can take out all the inheritance money if they wish, pay the taxes as ordinary income or they can keep the account where they will be subject to a minimum distribution each year

Q: Someone going into investment for the long term and planning not just retirement but succession of that money, what should they be thinking about right now for it to be processed smoothly at the time of their death?

Sheldon: There’s two ways of looking at it. As far as investing the money, there’s an overall balance in the account or I should say the portfolio between retirement accounts and taxable accounts. Taxation could play a big role over a period of time.

I would say that estate planning is very important. This means having the proper titling on your accounts so that at your death your beneficiaries receive the inheritance money in the most efficient manner.

Q: Quickly, talk about estate planning. What are some of the some of the things involved in estate planning other than financial accounts?

Sheldon: Estate planning is about who gets what, how and when they get it. There’s a lot of personal decisions involved. If you have minor children, this can be so important and I worry about how many people delay this decision. If you think about it, you’re going out for the evening, you leave a babysitter a list of all the things that could happen, but you don’t write down what happens if you don’t make it home that evening, or one of both of you become disabled or dies, what is going to happen.

These instructions are equally important and perhaps more important than what happens a long time from now.

The views expressed by Sheldon Harber are his own and should not be considered tax or legal advice. Consult with a licensed attorney or accountant to get answers for your questions.

Securities offered through a non-affiliated company, Cambridge Investment Research, Inc., a registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Cambridge Investment Advisors, Inc. a registered Investment Advisor

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