What Is an Inheritance?

An inheritance is the set of assets that an individual bequeaths to their loved ones upon their death. It may be subject to inheritance taxes. A recipient may inherit the assets as an heir, or they may be named as a 澳洲幸运5开奖号码历史查询:beneficiary in a wi🍸ll, retirement plan, or life insur🌱ance policy.

How an Inheritance Works

In most countries, inheritance assets are subject to 澳洲幸运5开奖号码历史查询:inheritance taxes, where beneficiaries may find themselves saddled with tax liabilities. The rates of an inheritance tax depend on a host of factors, including a beneficiary’s state of residence, the value of the inheritance, and the beneficiary’s relationship to the decedent.

The six U.S. states that levy inheritance taxes are Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. In most of these states, any assets that are bequeathed to a spouse are exempt from inheritance taxes. In some cases, children are also exempt, or they may face lower rates of taxation.

Beneficiaries with no familial ties 💖to the decedent are typically subject to higher inheritance taxes than beneficiaries who are clos🦩ely related to the decedent.

Consider the following example: In Nebraska in 2024, a parent, grandparent, sibling, child, or other lineal descendants (including adopted children) paid an inheritance tax of 1% on assets exceeding $100,000. By contrast, relatives who were further removed from the decedent paid higher inheritance taxes up to a rate of 15%.

The Probate Process

Probate is the legal process by which a decedent’s assets are divided among their heirs and beneficiaries, according to their will and state laws. If the decedent died with a will, that will is reviewed by a probate court, which appoints an executor for the decedent’s estate. The executor is then responsible for dividing the estate among the people named in the will and any 澳洲幸运5开奖号码历史查询:creditors.🌳 Any disputes are resolved through probate cﷺourt.

A person who dies without a will, or with an invalid will, is said to have died 澳洲幸运5开奖号码历史查询:intestate. In this circumstance, the probate court will appoint an administrator of the estate to div▨ide the assets according to state laws.

Beneficiaries vs. Heirs

There is a distinction between a beneficiary and an heir. Beneficiaries are individuals named in a will, while heirs are people who are entitled to receive a decedent’s property by intestate succession, a set of rules created to 澳洲幸运5开奖号码历史查询:sort out inheritance matters in the absence of a will.

The Bottom Line

While nobody enjoys thinking about their death, a well-structured estate plan ca🍌n save your heirs and beneficiaries from a lot of legal unpleasantries. Moreover, it can also ensure that they receive as much money as possible, without losing too much to taxes.