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Transferring the Assets

How assets will pass to you and the options for assuming ownership can involve many variables and will be at least a little different for everyone.

You should know what to expect for each type of asset you inherit as it passes to you. You’ll also need to know any special restrictions or requirements after you have inherited the assets. As always, consult your attorney or tax advisor for your specific situation.

Cash and bank deposits

Cash and money in bank accounts typically go through probate and are subject to estate and other taxes. A bank account may have what is known as a transfer on death (TOD) designation, which functions similarly to a beneficiary designation.

Investment accounts

Investment accounts usually have a TOD designation. If you are named in a TOD designation on an investment account, the account can usually pass directly to you without going through probate.

Real estate and other valuables

Real estate and other possessions (such as cars, antiques, jewelry, and other personal and household property) also go through probate and are subject to estate and other taxes. If any asset is left to more than one beneficiary, the will may spell out how it will be divided; if it does not, the court will make the determination.

Since these assets may be illiquid, having to sell them in order to divide them may take extra time and involve the risk of selling for less than their fair market value.

Transferring real estate is also subject to many specific regulations, which vary from state to state. As always, consult your attorney or tax advisor.

Retirement accounts

If the deceased was 70½ or older and had an IRA, there may be a minimum required distribution (MRD) due before transfer to a beneficiary. If you inherit an IRA you should determine if this is the case and be prepared to take the distribution to avoid penalties.

If you are eligible you may be able to minimize taxes, avoid penalties, and preserve tax-deferred growth potential on retirement assets by rolling these inherited assets over into other retirement accounts. The specific type of account you may roll assets into depends on your age and your relationship to the deceased.

For the latest details on inheriting a retirement account, see Fidelity Viewpoints® on Inherited IRAs.

Trusts

Although they are used in many ways, one of the main advantages of a trust is that it usually moves assets outside of the probate process. The trustee of the trust has the responsibility of carrying out the terms of the trust and distributing its assets.

If you are named as a beneficiary of a trust, the trust will spell out specifically under what circumstances you may access the trust assets, as well as the procedure for access.

If you are named as the trustee on a trust, see the Trustee guidelines.

Annuities

Some annuities cannot be inherited, as payments stop when the owner passes away. Some, however, can pass to a designated beneficiary or have special provisions for transfer to a spouse.

Because they allow the owner to name a beneficiary, annuities that can be inherited do not usually have to go through probate and you can contact the company for ownership transfer instructions.

Life Insurance

If you are the beneficiary of a life insurance policy, the proceeds can pass directly to you without going through the probate process. Furthermore, the proceeds are not subject to income tax; although, depending on the size of the decedent's estate, estate taxes may apply. In order to receive the funds, beneficiaries should contact the life insurance company and provide any requested documentation.

Next steps

Executor & trustee guidelines
If you’ve been named as a trustee or executor of a will, you can get an understanding of your duties here.

Call our inheritance specialist with questions or to find out about transferring a Fidelity account at 800-544-0003.

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transfer on death (TOD)

a provision of a brokerage account that allows the account’s assets to pass directly to an intended beneficiary; the equivalent of a beneficiary designation

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illiquid

refers to a noncash asset that cannot be sold quickly or easily without the risk of loss in value

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minimum required distribution (MRD)

mandatory, minimum yearly withdrawals that generally must be taken starting in the year the accountholder turns 70½, upon retirement, or at death

illiquid

refers to a noncash asset that cannot be sold quickly or easily without the risk of loss in value

minimum required distribution (MRD)

mandatory, minimum yearly withdrawals that generally must be taken starting in the year the accountholder turns 70½, upon retirement, or at death

Questions?

Speak with an inheritance specialist.

The tax information and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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