Law

Legal Implications of Inheriting Assets from a Dead Relative

company formation documentsWhen a person passes away, their possessions and assets are either donated to charity or inherited by family members. The terms of this transfer, sometimes known as inheritance or succession, are fairly complex, and attorneys are frequently involved in the process. Countries and jurisdictions have different inheritance rules depending on the kind of property left behind.

Imagine that the deceased had taken the initiative to prepare a will and adhered to all the requirements to make it enforceable. In that situation, the inheritance issue is typically easy to process. But let’s say there is no will present when someone passes away. In that situation, the process is made more difficult by the state’s choice of how to split the property. These cases have various legal repercussions for the property’s heirs, some of which are outlined below.

Unpaid Debt

As a general rule, debts cannot be inherited. When someone dies, only their estate is liable to pay their debts, and the responsibility of overseeing the whole process falls to the estate’s administrator or the will’s executor. After death, all the deceased person’s assets pass to their estate. The will beneficiaries are the first people the estate pays their share. If some money is left afterward, it should be used to pay the debts; if no money is left, the debts are not paid. However, there are some instances where someone may be liable to pay the deceased’s debts. Joint account owners and co-signers of a loan are liable to pay the other’s loan if they pass.

Moreover, in some states, parents, and spouses are responsible for paying the healthcare costs of a deceased family member. However, authorized users of credit card accounts are not responsible for paying the amount due if the credit card holder passes away. Since this matter is so complicated, it is best to do thorough research if someone comes to collect a dead relative’s debt from you.

Inheritance Tax

It is a tax imposed on a deceased person’s assets that someone else inherited. It is levied on the value of the beneficiary’s inheritance, and the beneficiary must pay it. Contrary to what the name may suggest, it is not the same as an estate tax, which is calculated based on the valuation of the entire state and is paid by the relevant party. There is also a distinction between trusts and wills where this tax is concerned. If money is left to people through trusts or insurance policies, inheritance tax does not apply.

Moreover, only six states—Kentucky, Iowa, Maryland, New Jersey, Nebraska, and Pennsylvania—impose this tax; the federal government does not levy it. That is why most people don’t know much about this tax. Suppose you reside in one of these states, or the family member you have inherited property from lived here. In that case, you should inquire about this tax to figure out if you owe any money. The sum to be paid typically varies based on the quantity and your relationship to the person from whom you inherited it. In every state, surviving spouses are exempt from inheritance tax

Will Contest

Most people think that once a will has been drawn, it is bound to be followed to the letter. And all the wishes of the deceased will be carried out according to the will. However, if the validity of a will is brought under scrutiny in court, nothing remains certain. Suppose a family member suspects that the contents of the will do not reflect the true wishes of their deceased family member. In that case, they may decide to file a petition called a will contest. Sometimes one child is given most of the inheritance while the rest are left with small portions. Other times, sizable gifts are left to the nurse or caregiver looking after the deceased during their last years.

If the provisions of the will they are disputing give them less from the estate than what they would receive if the will were to be set aside, that party is said to have standing. Suppose a party can demonstrate something unethical, such as undue influence or elder abuse. In that case, they are said to have grounds to contest a will.

Intestate Succession

Suppose a person passes away without a will, or their will is declared invalid for any reason. In that case, their estate is said to be in intestacy. A court-appointed administrator will be responsible for compiling all assets, paying debts or taxes, and distributing the rest among the beneficiaries. State law is consulted to determine succession for properties solely owned by the deceased and for which no beneficiary has been formally named. If a property is co-owned with the right of survivorship, it will go to the co-owner. Certain assets like life insurance proceeds, properties held in a living trust, 401(k) ‘s and IRAs, and properties held in a transfer-on-death account or deed, are not transferred by a will even when one exists. So the absence of a will has no bearing on the deceased’s assets.

A post by Kidal D. (5806 Posts)

Kidal D. is author at LeraBlog. The author's views are entirely their own and may not reflect the views and opinions of LeraBlog staff.