According to History.com, Thanksgiving started in the 1600s, when Plymouth colonists and Wampanoag First Americans shared a harvest feast. That was the first Thanksgiving celebration in the colonies, and, for the next two centuries, Thanksgiving was celebrated by individual states and colonies.
It wasn’t until 1789 that Thanksgiving became an actual government holiday. President George Washington declared that November 26, a Thursday that year, would be the day of Thanksgiving celebrations. Since then, Turkey Day has always fallen on the final Thursday of the month. It is a time to be grateful, eat delicious food, and watch football.
When it comes to Thanksgiving, we are supposed to be appreciative for what we have. In most households, people go around the table saying something that they’re grateful for. While that’s an awesome tradition, you should take your appreciation a little further. In this article, we’ll talk about the best way to pass assets and wealth to your heirs.
401(k)s and IRAs
401(k)s and IRAs are investment accounts that grow, free of taxes, while you’re alive. They continue this tax-free growth after being inherited by your beneficiaries. Some heirs, like spouses and people who have disabilities, are able to hold these accounts during their lifetimes. But note, most heirs have to empty 401(k)s within ten years.
Your house is likely the most valuable, nonfinancial asset that you have. Depending on where you live, heirs may not have to pay a capital gains tax on the house, should they decide to sell it. The heirs will, however, have to keep up with upkeep and taxes, so make sure that whoever you choose is able to do so.
Term Life Insurance
For loved ones who rely on your caregiving and income, term life insurance can be a godsend. You can get a lot of insurance coverage for, comparatively, not much money. Term insurance is a variety of life insurance that covers people for a set term of years. If someone dies within that term, a death benefit is paid. You can make your loved ones your beneficiaries.
Note that if you don’t die during the term, you won’t get the money back. But, that’s not necessarily a bad thing. After all, you’ve purchased home insurance, but that doesn’t mean you want your house to burn down. Term life insurance is an affordable way to safeguard your loved ones who depend on you.
Whole Life Insurance
Whole life insurance is a simple form of permanent life insurance. It covers your entire lifespan, as long as you pay the premiums. When you die, this life insurance death benefit is paid out to your beneficiary. These policies not only provide a guaranteed benefit upon death for your heirs, there is also a cash-value component that you are able to access for long-term care, emergencies, or other needs. Whole life insurance can be more expensive than term life insurance, and you should avoid borrowing against your policy, as that can backfire pretty badly.
Simply put, an annuity is a contract that you sign with an insurance company. You make a lump sum payment or a series of payments. In return, you get periodic payments that last for life. You can put your beneficiaries onto an annuity, ensuring that they get a steady stream of income. Annuities that have a death benefit can also provide a huge lump sum for your beneficiary, if you die.
Contact an estate planning attorney to set up these documents, as doing them yourself could lead to legal mishaps and unenforceability. Discuss your estate plans with your loved ones sooner than later, especially if you plan to leave a large amount to charity or leave different people different amounts.