06 Mar Inheritance Law and Attorneys
What is inheritance law?
Inheritance law involves the rules governing how property will be passed along from a decedent (a person who has died) to survivors (persons selected by the decedent to receive their property upon death). Inheritance laws not only state what is required for a beneficiary to receive property from a decedent’s estate, it also provides guidance when the decedent’s instructions as to inheritance are unclear, or there is not a written will outlining how property will be passed along to beneficiaries.
Inheritance laws are applied by a probate court that oversees the distribution of property from the decedent’s estate. Probate (link to probate page) is a legal process where the court supervises transferring a decedent’s property after death. The probate court would apply inheritance laws to guide the distribution of property and resolve any disputes regarding how the decedent’s estate should be administered and distributed.
Before discussing some of the basic legal rules governing inheritance, it is important to understand what type of assets do not fall under inheritance law. For example, property held in a living trust (link to living trust page), proceeds from a life insurance policy, payable on death bank accounts, and property the decedent owned with someone else in joint tenancy with the right of survivorship. These types of assets would not be included in the probate process. Therefore, they can be distributed to beneficiaries without probate court involvement.
Does inheritance law apply for those who die without a will?
Situations in which a decedent has a will (Testate) provide a clear opportunity for inheritance laws to be applied since the probate court will generally attempt to ensure that the estate is disbursed in light of the plain language of the will. Of course, ambiguities may arise from the language of the will or the validity of the will may be challenged to a will contest, in these cases inheritance law would guide the court’s decision-making on how to resolve these disputes.
Another important consideration under inheritance laws involves how property passes to survivors when the decedent dies without a will (Intestate). In California, inheritance law provides a number of rules to address situations involving intestate succession.
The first consideration will involve whether the decedent was married. If the decedent died while married, property will pass to the decedent’s spouse. However, if the decedent was not married, the estate is distributed to the decedent’s children, who receive estate assets in equal shares.
If there are no children or spouse, the estate goes to the decedent’s parents. If there are no parents living, the property is distributed to the decedent’s brothers or sisters. If there are no brothers and sisters, or if they are deceased, their children (decedent’s nieces and/or nephews) acquire the estate in equal shares.
If the decedent’s sibling(s) and/or their child(ren) are deceased, the decedent’s grandparents will inherit the estate. If there are no living grandparents, then the decedent’s aunts and uncles, or if there aren’t any aunts and uncles, the decedent’s cousins, will inherit the estate.
Are inheritances taxed?
As the old saying goes “nothing is certain, but death and taxes.” Given this sad fact of life and death, there are tax implications that must be considered when considering inheritance laws.
In addition to establishing the rules for property distribution, a conscientious inheritance lawyer must be prepared to consider the tax implications of the distribution of the decedent’s estate. Not properly considering the tax implications of an estate plan can be a costly error, particularly if the estate can be structured to avoid or reduce tax liability.
The primary type of tax impacting inheritances from a decedent is the so-called “death tax” or as it is more officially referred to, estate taxes or inheritance tax. A death tax is imposed on property transferred at death to a survivor.
The federal death tax is known as the “federal estate tax.” Under the federal law, a person can transfer property with a net value of $5,430,000 (total gross value fewer debts) in 2015 at death without incurring a tax liability. Property transferred in excess of that amount would be subject to taxation unless other exemptions apply which could reduce the amount subject to taxation.
Currently, California does not impose a death tax; however, property located in other states that do impose such a tax may be subject to taxation. Experienced counsel can explain the tax implications of interstate movements of property as part of an inheritance.
An inheritance attorney can provide legal advice regarding what to expect from a will and the steps needed to protect estate assets. Finding an experienced attorney experienced in inheritance law offers a measure of protection for those administering an estate. Further, it can reduce a great deal of uncertainty for those who wish to pass on assets to loved ones knowing that the possibility of disputes and negative financial implications of and estate plan have been reduced.