Legacy Planning & Inheritance
Leaving a legacy is an important goal for many people. Whether you’re setting up an estate plan or receiving an inheritance, we’re here to help you plan for your financial future.
Why Is Estate Planning Important?
Estate planning is an effective way for you to plan your legacy and how your assets will be distributed according to your wishes. Estate planning is an important component of a financial plan, but many people tend to put off this step. Planning for your legacy now can save your loved ones much grief and confusion during a particularly trying time.
Common planning strategies include wills, trusts and Transfer on Death (sometimes referred to as TOD) designations. Learn more about how to create your own estate plan or how to help your elderly parents with their estate plan.
Many people postpone the process of writing a will for a variety of reasons. However, you will likely find that talking to your family and completing your estate plan can help provide confidence as you look forward. Estate planning laws are complex, so meeting with an estate planner or attorney is a smart decision.
Will
A will is a legal declaration that describes how you want the assets that are titled in your name to be distributed after your death.
Trust
A trust is 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.
Transfer on Death (TOD)
This designation allows an account owner to transfer assets to one or more designated beneficiaries without the need for probate.
Whether you’re taking inventory of your assets, deciding where your money will go or making sure you’re keeping your plan up to date, our checklist will help you keep track of important estate planning considerations.
Why Do I Need to Choose Beneficiaries?
Selecting beneficiaries ensures that your assets are distributed according to your wishes. By adding a beneficiary designation to your American Century Investments accounts, 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 advisor for advice regarding your situation.
Beneficiary Considerations
Retirement Accounts
Designating beneficiaries on retirement accounts is an important part of financial planning to make sure your legacy is directed as you choose.
From this list, select your appropriate account type(s) (IRAs, Transfer on Death, Workplace Plans, Brokerage) and then establish or manage your beneficiaries.
Non-Retirement Accounts
Most non-retirement accounts do not have named beneficiaries and may not need them, depending on the estate planning choices you make. Each option has advantages and disadvantages. This is why it is important for you to consult with an estate planning attorney to determine what is best for you.
Individual
Advantages: Assets will be distributed according to your will.
Disadvantages: Assets are subject to probate.
Tenants By Entirety
Advantages: Assets easily pass to the joint owner. Probate is avoided.
Disadvantages: Requires all owners to sign paperwork in order to make certain transactions.
Joint Tenancy With Rights of Survivorship
Advantages: Assets easily pass to the joint owner. Probate is avoided.
Disadvantages: Requires all owners to sign paperwork in order to make certain transactions.
Trust
Advantages: Can specify who gets your assets and how they are distributed. Probate is avoided.
Disadvantages: Can be expensive to establish.
Transfer on Death (TOD)
Advantages: Simple and can specify beneficiaries. Probate is avoided.
Disadvantages: Must be kept up to date with life events.
Tenants in Common
Advantages: Assets will be distributed according to your will.
Disadvantages: Assets are subject to probate.
How Do I Transfer an Inherited Account?
Inheriting an investment account comes with decisions and paperwork to transfer the assets to the heirs. The type of accounts will determine the documentation needed.
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.
Cash and cash accounts without Transfer on Death designations
Personal property, including valuable items
Real estate
Assets that allow the naming of beneficiaries, but for which none has been named
Assets held as Tenants in Common
Accounts that allow for the naming of beneficiaries, such as IRAs, 401(k)s or Transfer on Death 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.
Required Documents for an Inheritance Transfer
Retirement Accounts
Traditional IRA
Copy of Death Certificate
Roth IRA
Copy of Death Certificate
Non-Retirement Accounts
Individual Account
Copy of Death Certificate
Copy of the court appointment of the Personal Representative or a properly executed Small Estate Affidavit. (To obtain a Small Estate Affidavit, contact the probate division of the court in the county where the decedent lived at the time of their passing.)
Joint Account
Copy of Death Certificate
Trust
Copy of Death Certificate
Copy of the trust document's title page, signature page and pages that identify the person(s) authorized to act after the death of a trustee (to help us determine who is authorized to act)
Transfer on Death (TOD)
Copy of Death Certificate
Documentation can vary based on the decedent's state of residence and value of the accounts owned.
You can check out the online resources at Atticus®* to determine if their information and tools on estate settlement, probate and inheritance may help you with your specific situation. Accessing this information through American Century lets you receive this premium offer at no cost.
* This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. Atticus, Inc.® is not affiliated with American Century Investments. Providing a link to the company does not suggest a recommendation or endorsement by American Century Investments. It's simply a service that clients and non-clients can research and choose to do business with if they determine it is appropriate for their situation. There are different options available for your estate planning. You should consider all options before making a decision. Atticus® is a registered trademark of Atticus, Inc.®
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
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.
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