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.
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.
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.
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.