Your assets need to be transferred to the next generation when you pass away. Your assets may include everything from a family home to a business to your bank accounts and investment portfolios. Your assets also include sentimental items and other things that may not have much financial value but that are still important to your family.
There are numerous ways that you can transfer these assets. Below are three of the most common options, along with some of the benefits of using each.
Writing a will
The main tool that people use to transfer assets is a will. This can be a very basic document. It can simply state that, when you pass away, you would like certain people to get specific assets. Your estate administrator will read this will and distribute copies to your heirs. They will then take inventory of the assets that you own and distribute the ones that are listed in the will. The only real downside to using a will is that it doesn’t give you much control. If you leave $10,000 to one of your heirs, for instance, they can do whatever they want with it.
Creating a trust
For this reason – and many more – people sometimes use a trust to transfer assets. With this resource, you simply transfer the assets into the trust and then that trust regulates how the assets are distributed. This can, when used correctly, give you more control. For instance, you could say that your heir only gets their inheritance once they have graduated from college or after they turn 30.
Using POD accounts and beneficiaries
Finally, you could consider the way in which your accounts are set up. Payable on death (POD) accounts allow you to list a beneficiary. When you pass away, the beneficiary then gets the contents of that account. Similarly, life insurance policies will ask you to choose a beneficiary. You don’t have to list your life insurance in your will because it is going to be distributed in accordance with this beneficiary designation, not with the will.
Exploring your options
These are just three ways you can transfer assets to your heirs. Consider them all carefully – and seek legal guidance as appropriate – as you set up an estate plan.