Considerations for Leaving Assets to Your Heirs

As we continue to grow older, we begin to face decisions on how to leave our assets to our heirs upon passing. This process becomes more complicated when a greater amount of assets is involved. Accordingly, there are three main factors to consider when deciding how to distribute assets: liquidity, sentiment, and tax planning.

The more liquid assets you can leave your family the better. If you leave mainly hard assets, your heirs might have to sell them for a discounted price to pay the estate tax. Usually, families have several sentimental assets to bequeath, so it is best to discuss the disposition of these assets before passing to avoid family conflict. Also, when considering tax implications upon passing, the estate tax will be ascertained on the fair market value at death, so hard and virtual assets are the same in this regard. However, retirement accounts do not benefit from a step-up basis, leaving a heavy tax burden on your heirs. With all of these considerations, it is best to work with an estate-planning attorney to specifically document how your assets will be distributed.

See Tim Parker, Estate Planning: Which Assets Are Best to Leave Your Family, Investopedia, June 27, 2016.