Don’t Forget to Think About the Tax Implications of The Assets You Transfer

Passing on assets to your loved ones and even organizations you care about as you pass away is an important factor in the estate planning process. After you pass away, your chosen executor of your will must know what property you have, and your instructions for distributing it. You may accidentally reduce the value of the assets you transfer simply by gifting them outright during your life or after you pass away, so it’s valuable to speak with a New Hampshire lawyer first.

The executor plays such a crucial role in estate administration because state governments hold billions of dollars in unclaimed property, frequently because no one knew about all of the valuables and financial accounts owned by a decedent. Laying out what assets you’ll give to other people and account details is important as part of your estate plan.

Even if you don’t plan on leaving an inheritance, it’s a good idea to make this list since it will make estate administration so much easier. Another key consideration as you draft out your list of assets is taxes. The kinds of assets that you choose to pass on to others matter significantly for tax purposes. Mutual funds and stocks, for example, that are held outside of any retirement plan may be more helpful for your heirs to receive when compared with pretax funds in an IRA or a 401(k). That’s because of the step up in basis rules.

In another example, it’s better for a spouse to inherit your IRA retirement benefits due to the secure act distribution requirements when compared with children. If this seems overwhelming, contact an estate planning professional to conduct a thorough inventory of all of your assets and help you determine the most appropriate strategy and tax implications for passing these on.

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