One Of The Best Assets To Inherit Is Low Risk And High Reward

Overall, the best assets to inherit have liquidity, which allows them to be equitably divided among multiple heirs, unlike real estate properties or rare pieces of art. More specifically, a certificate of deposit (CD) — one of the key liquid assets — can be a truly low-risk, high-reward inherited asset. A CD is a type of savings account in which you keep money for a fixed period of time, with the terms typically ranging from three months to five years. The interest rate is generally higher for longer-term CDs, but even a three-month CD generally has a higher interest rate than a regular savings account. Once the CD term is fulfilled, the account can roll over into a new one or be cashed out.

CDs fall into the low-risk category because they have a guaranteed return and get Federal Deposit Insurance Corporation (FDIC) coverage. The FDIC protects funds up to $250,000 per person in CD accounts held in banks. This means that, in the unlikely event that a bank fails, the federal government will ensure that the depositor receives their funds up to the limit. If the CD is opened at a credit union, then the National Credit Union Association (NCUA) performs the same function. This also means that it's possible to have too much money in a particular CD or savings account. People having more than $250,000 would need to strategically divide funds into more than one account to protect their assets with full FDIC or NCUA coverage.

People can inherit CDs through multiple avenues. Someone can be named as a beneficiary in a will, receiving the asset once the probate process is complete. Or the beneficiary can be named during the CD account setup, which typically takes precedence over what's listed in the will. For example, the account owner may have opened a joint CD; once they die, the co-owner will have ready access to the funds. Or the owner may have created a payable-on-death CD in which, upon the account holder's death, the funds automatically go to the named beneficiary.

Similarly, a money market account can serve as a low-risk, high-reward inheritance. Compared to a savings account, a money market account tends to have slightly higher interest rates but may require a higher minimum balance. These accounts hold easily divisible liquid assets — a core element of low risk and high reward — and get FDIC or NCUA coverage, much like CDs. Money market accounts come without the term constraints and early withdrawal penalties of CDs, which heirs may appreciate. Like CDs, these accounts can be inherited through the probate process, by being a joint account holder, or in a payable-on-death arrangement. When inherited through the last two methods, an heir can receive the funds even if a will does not exist.