Inheritance refers to receiving property or assets from someone who has died. Understanding the basics of inheritance can help New York residents in the greater Buffalo area prepare for the future and ensure their assets are distributed according to their wishes.
Wills and probate
A will is a legal document that outlines how a person’s assets will be distributed after their death. The process of distributing a person’s assets through the court system is called probate. If the deceased had a valid will, the court would follow its provisions. If there is no will, the court will distribute the assets according to state law.
Estate taxes are taxes imposed on the transfer of property from one generation to the next. The federal estate tax exempts the first $11.7 million of an estate in 2021, but this amount is subject to change. Some states also have their own estate taxes.
Beneficiary designations are essential in estate planning because they determine who will receive the assets of certain accounts, such as retirement accounts or life insurance policies, even if the provisions of a will conflict. It’s important to keep your beneficiary designations up to date, as changes in your life, such as marriage or the birth of a child, can impact your choices.
Joint ownership is a way to pass assets to another person without going through probate. For example, if two people own a house as joint tenants with the right of survivorship when one person dies, the other person automatically becomes the sole owner.
A trust is a legal arrangement in which a trustee holds and manages assets for the benefit of another person. Trusts can provide tax benefits and help ensure that your assets are distributed according to your wishes.
Preparing for the future
Understanding the basics of inheritance can help you prepare for the future and ensure that your assets are distributed according to your wishes. It’s important to have a will in place, keep your beneficiary designations up to date and be aware of estate taxes. Doing your due diligence can ensure that your estate plan is tailored to your individual needs and circumstances.