How to Split an Inheritance

By John Cromwell

When a person passes away, his property is transferred to other individuals. This transfer represents each recipient’s inheritance from the decedent. Distribution of the person’s property can occur in several ways. The decedent may have drafted a will prior to his death describing how his property is to be distributed. If the decedent died without a will, the property is disbursed under a scheme governed by state law called “intestacy.” Prior to distribution, the estate may be subject to the federal estate tax.

When a person passes away, his property is transferred to other individuals. This transfer represents each recipient’s inheritance from the decedent. Distribution of the person’s property can occur in several ways. The decedent may have drafted a will prior to his death describing how his property is to be distributed. If the decedent died without a will, the property is disbursed under a scheme governed by state law called “intestacy.” Prior to distribution, the estate may be subject to the federal estate tax.

Inheritance Defined

An inheritance is what an heir or other designated beneficiary receives from a decedent’s estate. An estate is made up of all of a decedent’s property. The purpose of the estate is to hold the decedent’s property until it can be distributed to the decedent’s beneficiaries. The local probate court generally retains the right to oversee administration of the estate and the distribution of its assets.

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Last Will and Testament

A will is a legally binding document drafted by someone preparing for death that describes how he wants his property to be distributed. To be legally binding, the will must be drafted in accordance with the probate code of the state in which the decedent resided at the time. The requirements for a valid will vary from one state to another. The benefit of a will for its drafter is that, assuming he complies with the state’s drafting standards, he can have his property distributed according to his wishes rather than as directed by a state-mandated distribution scheme.

Intestacy

If a decedent dies without a will, his estate is placed in intestacy. Assuming that the decedent’s property’s value exceeds the debt and funeral expenses, the state’s probate court will distribute the value of the estate. Intestacy also comes into play when the decedent had a will but it did not distribute the entirety of his estate. The intestacy rules will distribute whatever property the will did not allocate, and the recipients will generally be limited to the decedent’s spouse, surviving children and parents.

Estate Tax

The estate tax is applied to the decedent’s estate and it is the responsibility of the estate, not the beneficiaries, to pay the levy. This tax is a fee that the government charges for the decedent’s right to transfer his property. As of January 2012, only estates valued in excess of $5 million are subject to the estate tax. The value of the estate is based on the fair market value of the property at the time of the decedent’s death.

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References

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Can Only Parts of Estates Be Disbursed in Wills?

It’s surprisingly common for a will not to include all of a decedent’s property. He might acquire an asset after he writes his will then forget to amend the will to pass it on to a beneficiary. He may leave a bequest to one individual, but make no provision for what should happen if that individual predeceases him. When this occurs, the decedent has died “partially intestate.” Omitted property must pass according to his state’s laws of intestate succession, or by some other means, because his will doesn't account for it.

The Inheritance Hierarchy Without a Will in New York State

A person who dies without leaving a will is said to have died “intestate.” New York courts distribute intestate property according to a statutory scheme of succession and these laws apply only to property located in the state of New York. Laws of other states may apply to real property located outside of New York, even if the decedent had been a legal resident of the state. The intent of New York's intestate succession law is to distribute the estate in the manner in which the decedent likely would have had she left a will; the statutory scheme distributes the decedent's property to the closest surviving relatives first.

When Is an Estate Considered Settled?

When a person dies, his property is gathered into an estate. The estate is formed for the purpose of settling his outstanding liabilities and distributing what remains to his heirs and beneficiaries. The process for distributing a decedent’s estate varies by state. As a result, review the laws of the state where the decedent lived to determine the process related to your specific set of circumstances. Generally, an estate is considered settled when a court declares the estate closed.

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