Estate Planning & Inheritance

American Century Investments® understands the importance of estate planning as part of your financial plan. Learn key concepts and strategies, as well as what your options are when you receive an inheritance.

  • Estate Planning
  • Inheritance
  • FAQs

The Importance of Planning

Estate planning is an effective way for you to plan how your assets will be distributed according to your wishes. Common planning strategies include wills, trusts, and transfer on death (TOD) registrations.

paper

Wills

A legal declaration that describes how you want the assets that are titled in your name to be distributed after your death.

certificate

Trusts

A fiduciary agreement in which one party, the trustor, gives another party, the trustee, the right to hold property or assets for a third party, the beneficiary.

documents

Transfer on Death (TOD)

Transfer on Death allows an account owner to transfer his or her assets to a designated beneficiary(ies) upon the account owner's death without the need for probate.

Many people postpone the process of writing a will for a variety of reasons. However, you will likely find that completing your estate planning will provide you with peace of mind. You may want to consider meeting with an estate planner or attorney due to the complexities of estate planning laws.

Selecting beneficiaries, for example, ensures that your assets are distributed according to your wishes. By adding a beneficiary designation to the accounts you own with American Century, you can simplify the asset transfer process for your heirs.

You and loved ones can rely on our Estate Transfer team to carry out your estate plan.

We can help you implement your estate plan, but American Century does not provide estate planning services or tax advice. Please contact an estate planner, attorney, or tax adviser for advice regarding your situation.

Beneficiaries

Non-Retirement Accounts

Retirement Accounts

Where to Begin

The type of accounts owned will determine the documentation that will be needed to transfer assets to the heirs. Probate is the process of settling the estate according to the decedent's will. When an estate is probated, a court reviews the will and documents the authorized individual to act on behalf of the estate.

Generally speaking, any asset that has a valid beneficiary designation will not have to go through probate, including most assets that are placed in trusts. The following table outlines which assets are and are not usually subject to probate in the most common scenarios.

building

Usually Subject to Probate

  • Cash and cash account without Transfer on Death (TOD) designations
  • Personal property, including valuable items
  • Real Estate
  • Assets that allow naming of beneficiaries, but for which none have been named
  • Assets held as Tenants in Common
line through courthouse

Not Usually Subject to Probate

  • Accounts that allow for the naming of beneficiaries (IRAs, 401(k)s or TOD designations (investments and some cash accounts)
  • Trusts, including assets placed in trusts that might otherwise have to go through probate (cash, real estate)
  • Insurance policy proceeds
  • Assets with ownership designated with Right of Survivorship

Note for non-retirement accounts: We will default to the date of death valuation when stepping up cost basis for any shares held by the decedent that are transferred due to death. If an alternate valuation date that meets IRS Regulations is required, please contact us or inform us in writing. Any shares acquired after the date of death will retain their original cost basis when transferred, unless they were acquired prior to the alternate valuation date.

What You Need

Non-Retirement Account*

Retirement Account*

* Documentation can vary based on the decedent's state of residence and value of the accounts owned.

Additional Resources

Inheritance Checklist 

Distribution Options 

FAQs

Where can I get a small estate affidavit?

You will need to contact the probate division of the court in the county where the decedent lived at the time of their passing.

Do you require the death certificate to include the cause of death information?

No. Because of privacy laws, some states issue two different types of death certificates—one that lists the cause of death information and another that does not. American Century Investments will accept a copy of either type of official death certificate.

How is the RMD calculated?

To calculate an RMD, the December 31 balance of the previous tax year is divided by the life expectancy factor as determined by the IRS Life Expectancy Tables.

How can I find out how much money I will receive as beneficiary of the decedent's IRA?

Once we receive a copy of the decedent's death certificate we will be able to release the value of your beneficial portion of the IRA. For security and privacy purposes we cannot provide information about the number of beneficiaries named or the percentages that were designated.

What is the difference between life expectancy distributions and five-year rule distributions?

Life expectancy distributions require a beneficiary to distribute a portion of the Beneficiary IRA each year for as long as the assets remain the in the Beneficiary IRA. Life Expectancy distributions are an option regardless of the age of the original IRA owner. Five-year rule distributions require that all assets be removed from the Beneficiary IRA no later than December 31 of the fifth year following the original IRA owner's year of death. There are no annual minimum withdrawal requirements. All or a portion of the assets may be distributed at any time as long as the entire account value is distributed by the deadline. Five-year Rule distributions are only allowed if the original IRA owner died before the required beginning date (April 1 of the year following the calendar year in which the original IRA owner reached age 70½).

Estate Planning and Inheritance Insights

Aging Parents, Adult Kids Agree: Money Talks Are Hard

It's surprisingly common for families to avoid discussing inheritance planning. Here's how to reframe the dreaded money talk.

Diversification and Consolidation: Not Just Investing Jargon

Diversification and consolidation may sound like investment jargon, but they're both important concepts in a portfolio. One aims to help you manage risk, while the other focuses on managing goals.

Plan Your Legacy at Any Age

Estate planning isn't just for wealthy "fifty-somethings." If something happens to you, having a plan can make it easier for those you love.

    Questions?

    Speak with an Estate Transfer Specialist
    M-F, 8 a.m.-5 p.m. Central time

    1-800-422-3301

    IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

    This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.