Passing down an inheritance? Here's how to handle these 4 complicated assets — including houses and retirement funds

• Having a comprehensive estate plan is crucial to ensure the preservation of your assets.
• Beware of legal and tax complications for common assets such as houses and retirement funds.
• An estate-planning expert shares the best ways to deal with these challenging assets.

Nothing in life is certain except for death and taxes, which is why comprehensive inheritance planning is critical.

Investors who've spent their lives accumulating wealth should have a long-term plan for their assets. Often people opt to divide their assets among their children or grandchildren. Some also participate in planned giving by donating assets to a philanthropic cause.

In an interview with Business Insider, Vimala Snow, the head of wealth strategy at Cresset Capital, shared four popular yet complicated assets to pass down to the next generation. Here are her tips to make the wealth transfer process as smooth as possible.

Houses

Snow's clients often plan to divide their assets equally among children.

That sounds simple in theory, but it can be quite difficult in practice, especially when it comes to a large asset like a home, often the most valuable asset in an estate. Beneficiaries may disagree about what to do with a house — tensions can arise if one beneficiary wants to sell but another wants to keep the asset.

Discuss any areas of disagreement ahead of time. Especially in the case of a family vacation home, make sure beneficiaries are aware of the costs of maintenance, taxes, and other expenses.

Snow recommended getting around this by splitting the overall estate balance equally instead of divvying up individual assets.

"There can be a decision made in the future with respect to who's actually going to get what," Snow said. "Obviously, owning a third of a home is not the easiest thing to do."

Retirement accounts

You can pass down retirement accounts, but beware of tax implications.

Your beneficiaries won't be able to make additional contributions to an inherited IRA, and they're on the hook for any taxes on distributions. They'll also have to empty the inherited IRA account within 10 years.

There are a few ways to reduce the tax impact. The tax rules are less strict for spouse beneficiaries — they can roll over the inherited IRA into their personal account and are exempt from the 10-year rule, meaning they can spread out tax payments over a longer period. Passing down a Roth IRA also has no tax implications.

Snow suggested donating your retirement account to charity for additional tax benefits. If you donate an IRA to charity upon death, neither you nor your beneficiaries will pay income taxes on distributions of the assets, and the charitable tax deduction can be used to offset estate taxes. You can also choose to split your IRA between your beneficiaries and charities of choice.

Family businesses

Family businesses are especially challenging because owners naturally feel attached to an asset they devoted much of their lives to.

But Snow says their children might not feel the same way. "We've certainly seen adult beneficiaries who inherit those assets and who feel really unprepared to handle them," Snow said.

Snow recommends making sure early on that your beneficiaries have the skills and desire to be involved.

If your beneficiaries don't want to take on the business, you have a couple of choices. If you want to keep the business in the family, you can consider bringing on an outside professional to outsource the business operations. You can also liquidate the business, which will convert business assets into cash.

This advice is also applicable to other more-complicated assets, such as a family investment vehicle, real estate, or farms.

"If you have that more complex balance sheet, making sure that your kids understand the complexity of some of these types of assets is really important," Snow said.

Collections

Snow often encounters clients with unique assets, such as collections of cars, antiques, or artwork.

Like a family business, these assets might have a lot of sentimental value but might not be easily passed down.

Sometimes beneficiaries will keep an item to commemorate the deceased, but Snow also sees collections being disbanded.

If the collection is highly significant to you, consider donating it. Donating collections can be an effective way to circumvent capital-gains and estate taxes.

"Oftentimes that's a really nice way to give to a museum," Snow said. Some people choose to further cement their legacy by attaching their names to their donated collections.

Communication is key

Snow says that ultimately, frequent and clear communication about estate planning is key.

"A lot of times parents think that their kids understand, but if you were to ask the kids, they would say, 'We have no idea how Mom and Dad think about these things,'" Snow said.

Confront disagreements about assets like a house early on, and provide details about complex assets like a family business. Being proactive about inheritance planning can make a wealth transfer easier for everyone involved.