Legacy Planning & Inheritance
Make your wishes clear with an estate plan and review considerations for inheritance transfers
Overview
We understand estate planning is an important part of a financial plan. But many people tend to put off this step. However, taking care of your legacy plans now can save your loved ones much grief and confusion during a particularly trying time.
If you're on the other side of legacy planning and have received an inheritance from an American Century investor, we can help with that too. And regardless of where your inherited money is coming from (here or another firm), you can check out the information and tools on estate settlement, probate and more through our relationship with Atticus®*.
The Importance of Estate 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 (sometimes referred to as TOD) designations.
Many people postpone the process of writing a will for a variety of reasons. However, you will likely find that completing your estate planning 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 legal declaration that describes how you want the assets that are titled in your name to be distributed after your death.
Trust
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)
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.
Start With Our Estate Planning Checklist
If you need help with estate planning, these are things to consider when getting started. Use this checklist as you prepare to meet with an estate planning professional.
Take an inventory of your assets
Even if you don’t think what you have is worthy of being called an “estate,” it’s important to include everything from homes and vehicles to all of your financial accounts. Remember cherished heirlooms or special items that you will want to pass down.
Designate your beneficiaries
For your financial accounts, it’s important to name beneficiaries. Even if you have instructions in a will or trust, most financial companies will follow the documentation they have for who will receive your account assets.
Determine charitable giving
An important part of a legacy can be the worthy causes a person would like to support. Consider this before speaking to an estate planner.
Consult with an estate attorney
An estate attorney or professional estate planner can help you wade through the rules and regulations and the important documents that need to be part of your plan.
Review your estate plan periodically
Once your estate plan is complete, remember to revisit the details regularly. Life and family changes, as well as your own objectives, can evolve over time.
Why Choosing Beneficiaries Is Critical
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 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 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.
Transferring an Inherited Account
Inheriting an investment account comes with decisions and paperwork to transfer the assets to the heir. It may be a trying time, but our specialists are here to help.
Where to Begin
The type of accounts will determine the documentation needed to transfer assets to 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.
• Cash and cash account without Transfer on Death 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
• Accounts that allow for the naming of beneficiaries (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.
What You Need
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.
Additional Resources
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 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.
* 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.®