Leaving behind a legacy is important, but figuring out what assets to leave to your heirs can be a daunting task. Here’s a rundown of the 14 best assets you can leave to your loved ones.
Real Estate
Homes, land, and commercial properties often appreciate over time, making them valuable assets. Leaving a property can provide your heirs with a stable place to live or a steady rental income.
Moreover, real estate can be a source of significant tax benefits through deductions on mortgage interest, property taxes, and depreciation on rental properties. Over the years, owning property has proven a reliable way to build and transfer wealth across generations.
Cash
It’s the most straightforward asset to inherit and can be used immediately. It can help cover funeral costs, pay off debts, or invest in other opportunities.
A healthy cash inheritance can also serve as an emergency fund, ensuring that your heirs are financially secure in case of unexpected expenses. This flexibility and immediate accessibility make cash a fundamental asset in any estate plan.
Stocks
The S&P 500 has historically returned about 10% annually, which can significantly increase your heirs’ financial security over the years.
Additionally, long-term stock investments can benefit from compounding returns, making them an excellent asset for building intergenerational wealth. Your heirs can hold onto these stocks for further appreciation or sell them to fund other endeavors.
Bonds
Bonds are a safer investment compared to stocks. They provide regular interest payments and are less volatile. U.S. Treasury, municipal, and corporate bonds can diversify your heir’s portfolio and offer steady income streams.
Bonds can also hedge against market volatility, providing stability during economic downturns. For example, municipal bonds often come with tax advantages, as the interest earned is typically exempt from federal income taxes. This can be particularly beneficial for heirs in higher tax brackets, ensuring they retain more of their inherited wealth.
Retirement Accounts
Retirement accounts like 401(k)s and IRAs can be passed on to beneficiaries. According to the IRS, these accounts can be transferred without immediate tax consequences, allowing your heirs to benefit from tax-deferred growth.
Make sure to name your beneficiaries to ensure a smooth transition. Additionally, Roth IRAs offer tax-free withdrawals, making them an attractive inheritance option. By inheriting a retirement account, your heirs can continue to grow the funds tax-deferred or tax-free, providing them with substantial financial resources for future retirement needs.
Life Insurance Policies
Life insurance can provide a substantial sum of money to your heirs upon your passing. Policies can help cover immediate expenses and provide long-term financial support.
Studies show that the average life insurance payout in the U.S. is around $168,000.
Furthermore, life insurance proceeds are generally tax-free, ensuring your beneficiaries receive the full benefit.
Collectibles and Art
Valuable collectibles and art pieces can be significant assets. These items often appreciate over time and can be sold for a profit. The art market, for example, saw a 3% year-on-year growth in global sales in 2022, reaching $67.8 billion, according to Art Basel and UBS Global.
Properly insuring and appraising these items is crucial to ensure their value is preserved and accurately reflected in your estate. Art and collectibles can also provide cultural and sentimental value, creating a legacy beyond financial wealth.
Vehicles
High-value vehicles like classic cars, boats, or RVs can be left to your heirs. These assets can be used, sold, or even leased. The classic car market alone is valued at over $1.5 billion annually, making it a potentially lucrative inheritance.
Ensuring these vehicles are well-maintained and properly insured is essential to preserving their value. Moreover, heirs can benefit from the enjoyment and utility of these assets, whether it’s using a classic car for weekend drives or an RV for family vacations.
Jewelry and Precious Metals
Jewelry and precious metals like gold and silver are timeless assets. Gold, in particular, has been a reliable store of value.
As of 2024, gold prices are at an all-time high, hovering around $2,400 per ounce, providing a stable and valuable inheritance. Jewelry can also carry significant sentimental value, making it a cherished family heirloom. Proper storage and insurance are important to protect these assets from theft or damage.
Education Funds
Setting up a 529 Plan for your heirs can help cover future educational expenses. These funds grow tax-free and can be used for qualified educational expenses. Data shows that the average cost of tuition and fees for the 2023-2024 school year was $10,662 for in-state public colleges and $42,162 for private colleges.
By investing in an education fund, you can ensure that your heirs have the financial resources needed to pursue higher education without the burden of student loans.
Trust Funds
Trust funds allow you to set terms and conditions for how and when your heirs receive their inheritance. This can ensure that the assets are used responsibly. Trusts can also provide tax benefits and protect assets from creditors.
For example, a revocable living trust can help avoid probate, ensuring that your assets are distributed according to your wishes without the need for a lengthy and costly court process. Trusts can also be structured to provide ongoing support for heirs with special needs or to fund charitable endeavors, aligning your legacy with your values.
Digital Assets
In today’s digital age, assets like domain names, cryptocurrency, and online businesses can be valuable.
Bitcoin, for example, has become a significant store of value, with its market cap surpassing $1 trillion in 2021. It’s important to provide clear instructions on how to access and manage these assets, including passwords and security keys.
Digital assets can also include revenue-generating websites or online content, providing a modern and potentially lucrative addition to your heirs’ inheritance.
Intellectual Property
If you hold patents, copyrights, or trademarks, these can be passed on to your heirs. Intellectual property can provide ongoing revenue through royalties and licensing agreements.
The U.S. Patent and Trademark Office states that IP-intensive industries support at least 45 million American jobs and contribute more than $6 trillion to, or 38.2% of, the GDP.
