The general principle of inheritance law is that the maker of a will, known as the testator, is entitled to distribute his property as he sees fit once the estate's debts are paid. Exceptions exist to this principle, however. If a person dies without a will, his property will be distributed according to state law. Under certain circumstances, the estate may be taxed by both federal and state authorities.
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Inheritance Rights of Spouses
The inheritance rights of a surviving spouse depend on the state in which the decedent lived. As of 2012, nine states are community property states. Under community property law, property gained by either spouse once married is generally considered community property, half-owned by each spouse. This means that half of the estate belongs to the surviving spouse regardless of the terms of the will. Other states allow spouses to hold title to property in their own names, but grant surviving spouses the right to renounce their inheritance under the will and claim a certain portion of the estate. In many states, for example, the surviving spouse may claim one-third of the testator's estate.
Inheritance Rights of Children
All states, except Louisiana, allow a testator to disinherit his children. However, when a testator's will fails to provide for his children, a probate court, the court with jurisdiction over wills and the administration of estates, often considers the omission to be a mistake, particularly for a child who was born after the will was signed. You may disinherit your children by specifically stating in your will that they are to receive nothing.
Intestate Succession Laws
State intestate succession laws apply when someone dies without a will or the will is declared invalid by a probate court. Intestate succession specifies the distribution of property in the absence of a will. Although state laws differ, the surviving spouse typically inherits everything if the deceased spouse has no living descendants. If the deceased spouse does have descendants, the surviving spouse may still be entitled to half the estate. If neither spouse nor children survive the deceased, intestate succession provides for distribution to grandchildren, siblings and parents in varying proportions. If no relatives survive the deceased, the property will go to the state.
Although the IRS imposes an estate tax on estates worth more than a certain exemption amount, this tax varies widely from year to year. In 2012, it applied only to estates worth more than $5,120,000, and the top tax rate was 35 percent. Some states also impose "death taxes" with different exemptions and lower tax rates.