The sudden and lengthy appearance of the coronavirus pandemic delivered many lessons — among them, that life can be taken away from even the healthiest individuals in the blink of an eye. Planning appropriate asset allocation before you die is an absolutely necessity for every adult.
Having a legally binding will in place lets you decide who will inherit your financial assets and possessions when you pass away. However, if you die without a will, the state in which you lived will make these very important decisions for you.
Financial assets are usually more straightforward, but as AARP noted, “Even IRAs and 401(k)s can be problematic, since they aren’t easy to transfer to the next generation or your children hold on to them for sentimental value.” Cash may be the best asset to leave behind, according to some experts.
You always want to do right by the deceased, but sometimes receiving another’s possessions when they pass can be more of an inconvenience than good fortune. Here are five of the worst assets to inherit and how to address them before it’s too late.
While it is a reasonable and kind act to pass on your hard-earned business to your children, not every child wants to “take over the family business.” A business requires a succession plan so there are no unresolved expectations and operating details. Barring passing it over to a family member, business owners will need to arrange a buy-out by any existing partners — or a sale to a prospective buyer — while they are still living and working.
The one good thing about inheriting a timeshare is that it is already (partially) paid for. However, inheriting a timeshare means taking over a shared vacation resort, condo or property that won’t increase in value, that comes with annual fees and maintenance costs — and that includes strict regulations and flexibility concerns. Timeshares are often more of a headache than a relaxing adventure away from home, so those who are considering passing them down to another should find out first if the timeshare is even wanted and if not, make arrangements to disclaim it.
Vacation property, plots of land or other real estate can be great possessions to leave to your children because they can appreciate in value. But they often also cause rifts among siblings and can incur an overwhelming amount of maintenance, taxes, utilities and hidden expenses. Disharmony can happen very quickly when matters of who gets the property, or who gets to sell it, arrive, said Molly Ward, a financial adviser at Equitable Advisors. “I’ve seen a lot of siblings get along well before their parents pass, and then the fighting starts,” Ward stated, per AARP. “One family had a gorgeous property, but never in a million years would the kids want it.”
Collectibles and Physical Property
Bequeathing valuable collectibles to an heir is a generous and rewarding gesture — but these can come with strings attached. Unless an inheritor simply wants to keep the collection, they will need to learn the true value of the asset, preserve it and work to find a appropriate buyer who won’t fleece them. “When it’s an asset people don’t understand, it’s very difficult,” Jean-Luc Bourdon — founder and wealth adviser at Lucent Wealth Planning — said, as quoted by AARP.
Handing down sentimental items can become a source of family infighting as well. MoneyTalks News quoted wealth advisor Nick Hughes of Visionary Horizons Wealth Management as saying that individuals should consider adding a personal property memorandum to their will, which “can reduce a lot of squabbles.”
Gun laws are state- and firearm-specific and carry with them formalities when it comes to possession and transportation. In New York, for example, there is a very short window of 15 days during which an executor of a deceased’s estate can possess their guns without being legally responsible. Most likely, the will hasn’t gone through probate yet and the gun(s) will need to be stored by the police or a gun dealer. Additionally, heirs may need gun permits of their own to accept these firearms so, more than collectibles or other items of value, planning is required to ensure that your guns are left to whom you wish in the proper manner.
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