Inheritance, whether it be cash, property, or investments, are not considered income for tax purposes. But usually, the assets gained from the inheritance can be taxed. For example interest on money in an account or inherited stocks.
One way to protect your inheritance is to be sure to set up a trust with the assets. A trust allows the passing of assets to beneficiaries without waiting for probate. Trusts are similar to wills but without the requirements. An irrevocable trust ties the assets up until the death of the grantor, meaning they are not collected tax value.
Another method is to lower your retirement account distributions. The inherited assets are technically not taxed until they are distributed and are distributed individually as well as taxed individually. So the more beneficiaries the money is distributed to, the more of the inheritance is taxed.
Another way to avoid taxes that may seem counterintuitive is to give some away. Not only could you donate to your favorite organizations and help some in need, but you can also receive large tax deductibles due to your donation. You can also choose to gift small amounts to beneficiaries throughout the years to cut your estate size. This can be especially helpful if your estate is nearing a taxable amount.
Another tip to consider for larger estates is to adhere to the alternate valuation date. This date is often six months after the death of the grantor. You can choose to value the inheritance sooner, but this can be helpful when an inheritance is taxable because the value of the estate could drop over six months, saving the inheritors from drowning in taxes.
The most important tip is to speak to an expert to catch up on ever-changing estate laws. This ensures you handle your inheritance securely, safely, and most importantly legally.
We would recommend you to talk to one of our advisers for life insurance quotes.
Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!
Call 011-3733-4610 – Monday to Thursday from 11.00 to 19.00 and on Friday between 11.00 and 16.00