Making Decisions About Leaving an Inheritance

Should you leave a part of your inheritance while still living?

Death is an uncomfortable topic — and a deeply personal one. Now throw in the topics of wills, inheritances, and what to do with your assets after you pass away, and it gets more complicated. Your instinct may be to shy away from addressing your wishes perhaps thinking it’s best left to loved ones to decide after you’re gone.

What happens to your assets after your death shouldn’t elicit such worrisome feelings, especially if you’re upfront with family members about your plans for your assets.

“One big challenge we face is that many people do not take the time to seek advice and implement a plan,” said Dan Bryan, Senior Vice President, and Area Business Manager for Regions Private Wealth Management in Georgia and South Carolina. “We have experienced situations where a business owner dies suddenly with no funding or legal mechanism in place to allow a loved one to retain, buy, or sell the business. This is just one reason it’s important to have the proper planning in place.”

People have choices when it comes to leaving an inheritance: give a portion of it to the heirs now or wait until after death.

The general rule is that any gift (e.g., giving a portion of an inheritance) is a taxable gift, but there are several exceptions to this rule. One exception is gifts that are not more than the annual exclusion for the calendar year. The annual exclusion for 2017 is $14,000. This means that you can make gifts valued at $14,000 or less to other individuals without owing the gift tax on these gifts. The number of these gifts that you make is limited only by the basic exclusion: the total amount you give as gifts over the course of your lifetime may not exceed $5.49 million. Married couples can combine their gifts to avoid the gift tax. For example, a married couple could give a favorite niece $28,000 in 2017 without incurring the gift tax.

This is an option some families use when they see a financial need that can be satisfied immediately rather than waiting to disburse the money as part of an inheritance.

“Some of our clients want to set up trust funds and educational plans for their grandchildren, so they can support their education,” Bryan said, adding that in some cases the gift is made straight to the college or university for tuition.

Comparable plans can be made to health care facilities and providers for medical expenses.

While you may think the time to analyze your will and estate plan is at the end of your career, financial planners suggest moving that time period back a few decades.

In your 20s and 30s, you should create a will, even if you have few assets. Once you marry and have children, wills become more important as they specify who you want to appoint as guardians for your kids.

Wealth accumulation typically increases during a professional’s 30s, 40s and 50s, and there are more pressing needs about a child’s education, homebuying and even helping a child start a business.

By the time you are in your 60s and 70s, you are refining your estate plan.

Inheritances Handled Differently for Different Reasons

“It’s hard to say if there is a right way or a wrong way to handle inheritance. Some couples who own businesses say they are not interested in leaving it to a family member, and they think about selling the business after retirement,” said Bryan, who has 26 years of experience in wealth management and fiduciary services.

Others families would only consider leaving it to their children to keep the business in the family.

“It can be troublesome when there is no estate plan and no plans for business succession,” Bryan said. “Consider having a team of people who can help you on private wealth management, investment services, insurance review, and estate planning.”

“No one wants to think of their demise because it’s not a happy topic,” Bryan said. “But just because you don’t want to think about death, doesn’t mean you shouldn’t plan.”

Learn more about retirement planning.


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This information is general in nature and is provided for educational purposes only. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation. Information provided and statements made by individuals who are not employees of Regions are the views, opinions, or positions of the individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Regions. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

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