Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Inheritance

What it is:

An inheritance includes those assets of an estate that are bequeathed, in whole or in part, to specific heirs.

How it works (Example):

The assets that comprise an estate are customarily transferred to individuals specified by name or relationship (e.g. "Howard Jones, III or "grandchild") in the will of the deceased. In the absence of a will, estate assets are transferred according to laws that protect the assets of the deceased (generally passing them to descendants in a specific order).  Once transferred, an inheritance is heavily taxed.

For example, Jim's estate is worth $10,000. His will specifies that his son and daughter each receive $5000. Following Jim's death, the son and daughter each receive $5000. This is their inheritance.

Why it Matters:

An inheritance represents the material legacy an individual leaves behind after his deThe definition of inheritance on InvestingAnswersath. In addition to the family dynamics involved in the transfer of an inheritance, there are significant tax implications for the inheritors depending on their circumstances and on the value of assets received.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...