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Five Tips for Protecting Your Family’s Inheritance

published 11/26/2015

Imagine that you buy your best friend a birthday cake, but before you hand it to her, the bakers each take a slice of their own for their efforts. You’re left with little more than a sliver standing in your plate.

For far too many American families, that is exactly what inheritance looks like.

“The inheritance you leave could still be eaten away by taxes and expenses,” U.S. News & World Report warns this month. To stop that from happening, they offer five tips for keeping your money where you want it — in the family. We thought we’d review those tips here.

1. Create a Will. Obvious, right? You’d think so, but studies show that the overwhelming majority of Americans (64%!) don’t have one.

2. List the Right Beneficiaries. World Report notes that an astounding number of wills do not even control the disposition of many assets. When that happens, those assets go straight to probate, which is what most people want to avoid. Take the decision-making power into your own hands instead! But don’t just name beneficiaries — name the right ones (and update often… unless you want your ex-spouse to end up with everything you own).

3. Put Your Trust in Trusts. As you can imagine, though, since most Americans don’t even have a will, they certainly don’t have a trust! That’s a shame. Trusts offer privacy, power, and protection for your family that a will alone simply can’t muster.

4. Retire with Roth Accounts. Depending on the beneficiaries you choose for your retirement accounts (see tip #2 above), those hard-earned savings might be subject to heavy taxes upon transfer. Converting traditional retirement accounts to Roth accounts can help you reduce your beneficiaries’ tax liability, but that conversion must be done carefully, lest you yourself be taxed too heavily during your own life.

5. Be a Giver. Everyone loves a philanthropist — even Uncle Sam. Making financial gifts to family and friends during your life can be beneficial for both you and your recipients. The same goes for charitable donations. World Report even alludes to a few “complex strategies” that allow you to really make the most of the tax code’s breaks for givers. Our team can help you find the strategy that makes the most sense for you.

Of course, there are more than five ways to protect your assets and prop up your family for the future. Undoubtedly, though, U.S. News & World Report is off to a great start.

If you’d like to learn more about putting these and other great strategies into practice for your own estate, give our Canton estate planning lawyers a call. We’re here to help.

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