It’s important to move inherited assets correctly to avoid inviting tax problems
The biggest risk when it comes to inherited assets isn't fraud or drama; it's a well-meaning mistake. Enterprize Estates Advisors can help ensure a clean execution plan is in place.
The biggest risk when it comes to inherited assets isn’t fraud or drama. It’s a well-meaning mistake.
Families who are grieving want to be efficient and often do what feels logical: move funds, pay bills, sell property or close accounts. But when it comes to an estate settlement, the particulars of how assets are transferred matter just as much as what’s being transferred.
The most basic mistakes in the process can end up being the most expensive ones, and often non-recoverable from the IRS
Beneficiaries who take a shortcut through this process may find they’ve created reporting problems, such as missed deadlines or penalties that don’t show up until months after the fact.
The most important box of all can be checked by ensuring there’s an execution plan in place, which Enterprize Estates Advisors can assist with in the form of a short clarity call that could prevent months of reworking. That can protect your family from unnecessary tax headaches.
Tax advisors often don’t specialize in or understand estate requirements. An execution plan protects the order of operations by confirming who has legal authority, gathering the correct institutional packets and moving assets in such a way that supports clean reporting and minimizes avoidable tax exposure.
There are a lot more minute details to that process than it might seem on the surface.
How can dealing with inherited assets be a slippery slope?
The main danger with inherited assets is that they can be hard to group together.
Some items must be transferred through a trust, while others go through an estate. Some pass by beneficiary designation and others through joint ownership or payable-on-death instructions.
Taxable events can be accidentally created, key records can be lost or reworks that further drag the process out can be triggered when those processes happen without the correct authority established.
Timing is the name of the game, as financial accounts often are required to adhere to distribution requirements. Real estate assets require transparency of the ownership trail.
Even paying expenses with inherited funds can be precarious because institutions and professionals need a clear audit trail of what was paid, from where and why.
For more information, call Enterprize Estates Advisors at 623-387-3141 or email info@enterprizeEA.com.
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