Inheritance” Matters to All of Us
Article by: Nipapan Poonsatiansup CFP®
It’s a common misunderstanding that inheritance reserved only for the riches and it doesn’t concern them. This misperception should be corrected because it matters to anyone, not just wealthy people with many assets. Planning for inheritance is important and should never be overlooked, regardless how much asset you possesses.
Inheritance planning is a plan to handover your assets to your heirs properly and efficiently. The following are the reasons why:
Follow the preparatory steps for inheritance planning:
STEP 1: Start from making a list of your assets and liabilities
Being aware of your own finance, properties or liability will make it easier to allocate your budget for retirement, debt repayment and a portion to pass on to chosen successors. When planning or drafting an estate while the asset owner still alive, consider taxation payable of properties such as real estate, vehicles, securities, cash or cash equivalents and other assets that exceed tax threshold as specified by laws.
Another method used for inheritance planning when an asset owner passed away is an estate planning. The estate planning involves management of business, house or land and other type of assets. An estate planning required a list of specific assets and its beneficiaries. Once estate owner dies, an assigned lawyer will enforce the estate and distribute all properties to designated beneficiaries accordingly. If a descendent inherited debt, liability must be settled out of the estate and nothing more
STEP2: Study laws related to inheritance taxation and gift taxation
The principle of maximizing inheritance are:
STEP 3: Inheritance transfer planning
Annually transfer partial assets in the amount that could minimize inheritance tax rate. The inheritance transfer should be thoroughly planned. Prevent potential conflicts and avoid passing on a single property to many inheritors. And do not transfer all your assets just to escape taxation and suffer the consequences when you exhausted all assets.
STEP 4: Consider transfer inheritance that get tax benefit
Life insurance is another tool for inheritance planning. A planer can identify on their insurance policy the beneficiary to give the last piece of asset. The death compensation from life insurance is not a taxable income. The beneficiary can collect money right after the death of policy’s holder because life insurance benefits are excluded from estate settlement.
Planning for inheritance is the easy way to ensure your assets are transferred to your love ones. Most importantly, plan ahead while you are alive for your own peace of mind.