Fees, taxes, debts, and other financial obligations can eat away at your estate, and leave your heirs with a reduced inheritance. U.S. News and World Report explains there are some steps you can take to help maximize the inheritance you leave behind.
You should start by drawing up a will. Having a will as the foundation of your estate plans gets you off to a good start. When used with a trust (generally as a backup plan), wills are commonly known as pour-over wills because they pour assets over into the trust.
Use a trust
You can maximize the money your heirs get by using trusts. These financial tools allow you to bypass many of the costly processes and send the assets right to your heir upon your death. However, trusts need to be properly funded (have assets such as real estate and bank accounts legally moved into the trust) while you’re still living in order to avoid probate.
Define your beneficiaries
Makes sure you name a beneficiary on every account you can. If you leave it blank, it could cause probate issues that will cost money. Also, make sure you update them often. If you list someone who has died before you, it will lead to complications.
Handle things while you are still here
If you really want to guarantee things go the way you want when you die, then you can handle it while you are alive. Gift your heirs their inheritance (up to a certain amount per year), and you can avoid taxes most of the time. Make sure you consult accountants and attorneys when making this decision. It could impact you in ways you do not realize, especially if you plan on using Medicaid down the road for long-term care.