Many want to leave something for our heirs to secure their future and provide them with a financial safety blanket. Assets will help with this, but not all assets. To help you gain some clarity, here is a list of the eleven best assets to leave to your heir.
Stocks
Stocks are one of the best assets to leave to your heir because they can be easily transferred through a will that clearly states the transfer. If your heir is named beneficiary, the stocks are immediately transferred.
Exchange-traded funds (ETFs)
ETFs are great assets to leave to your heir because once inherited, your heir will benefit from a “Step-up” basis, where the cost of the asset is adjusted to the market value at the time of your death. This will help your heir save a significant amount in taxes.
Target-Date funds
Target-date funds are mutual funds that maximize returns by a target date. They are a great retirement plan and can be a great asset to leave to your heir.
One of the main benefits of leaving target-date funds is that they can help your heir save taxes if they sell assets immediately after inheriting.
Commercial Property
Commercial properties, even smaller ones, are valued at six figures and generate consistent rental income. These could benefit your heir and help secure their future.
However, your heir might need to manage the property, and while they won’t be immediately taxed, capital gains taxes will apply when they sell the property.
Gold
Gold is the best asset to leave to your heir because of its high liquidity and demand. Gold is constantly appreciated and can be a security blanket for your heir during financial instability.
Your heir will receive a “Step-Up” basis for gold and can sell tax-free.
Valuable Artwork
Valuable artwork can be a beneficial asset to your heir, who can either keep it or sell it.
Your heir won’t have to pay any taxes on the artwork they inherit, but if they sell the artwork, they will be subject to capital gains tax.
Certificate of Deposit (CD)
A certificate of deposit is a savings account that pays a fixed interest, and you can leave it to your heir, and banks will treat it like a regular savings bank account. Additionally, you can make your heir a joint owner of your CD to make the inheritance process easier.
Inheritance tax is not levied on Certificates of deposit, but income earned from the deposit will be taxable.
Single member LLC
LLCs have unique legal and tax benefits that protect assets and make the transfer to your heir easier. Single-member LLCs are disregarded for tax purposes, and only assets owned in the U.S. by the LLC will be subject to tax.
Single-member LLCs are a great asset to leave to your heir because LLCs offer liability protection, so your heir’s personal assets will be protected from any business-related liabilities.
Annuity
An annuity is an investment that provides a steady stream of income. If you leave your heir an annuity, they will have multiple options, such as receiving a lump-sum payout, the whole amount in installments over a period of five years, or an annuity throughout their lifetime.
In the case of an annuity, only the distributed money will be taxable.
Cryptocurrency
Cryptocurrency is a great asset to leave to your heirs as they will receive a “Step-Up” basis, and it is not taxed until the total value of the inheritance exceeds $13.61 million.
Intellectual Property
Leaving your heir a unique intellectual property, if any, provides them a good source of income as they can continue commercializing the property.
Intellectual property and any proceedings from them are subject to estate tax.