When a loved one passes away, you may be in line to receive an inheritance. An inheritance involves any assets your loved one specifies to go to heirs at the time of death.
Although receiving an inheritance sounds easy, it can have multiple complications. You may need to go through the probate court in your state. Some of the relatives may contest the will. Creditors may pop up out of nowhere and demand payment for debts unknown to the heirs.
Understanding how inheritance works can make the process go smoothly for you.
What Assets Can Be Part of an Inheritance?
Items that heirs may inherit include the following:
- Money
- Stocks
- Bonds
- Structures like homes
- Land
- Personal property like cars and boats
- Jewelry
- Furniture
- Collections
- Antiques
- Family heirlooms
The deceased person often intends for certain assets to go to certain heirs. However, this isn’t always possible. The estate may need to sell some assets to pay debts to creditors or to split the estate’s value in the desired percentages to all heirs.
How To Make an Inheritance Process Go Smoothly
If your loved one plans to give you and other heirs an inheritance, legal documentation can help the process go smoothly.
Creating a Will
Your loved one could create a will before passing away. The will is a legal document specifying who receives assets from your loved one’s estate. The will should name a person as the executor to oversee the management of the estate upon your loved one’s death.
To be legally binding, a will often requires the signatures of at least two witnesses. It may need notarization, too.
A will must be a written document rather than a verbal promise. Each state has specific rules for creating a valid will.
After the death of a loved one who created a will, the will typically goes into probate court. Each state has rules regarding the probate process, which ensures the will’s validity. It allows all heirs and creditors to make their claims against the estate. A legally valid will that includes specific information can make probate go smoother.
Using a Living Trust
A living trust is a document that significantly simplifies the distribution of assets in an inheritance.
When you create a trust, it becomes an entity legally holding your estate’s assets. A trustee manages the assets through the trust. The person who owned the assets and placed them into the living trust can serve as the trustee until death.
Because these assets are not in your loved one’s name at the time of death, the assets do not go through probate. Instead, the trust has instructions for distributing the inherited assets directly to the heirs.
What Are Some Potential Complications With Inheritance?
The process of distributing an inheritance to heirs can run into complications. As a result, you may find yourself waiting several months or even more than a year to receive your inherited assets.
Lack of a Will
If your deceased loved one dies without a will, the probate court takes over the distribution of the estate. Most states have intestate succession laws that determine which close relatives of the decedent receive assets and at what percentage.
Such distributions may not match the wishes of the decedent. However, without a will, the court must guess the decedent’s wishes.
Taxes and Debts
Creditors are given time to seek payment for any debts from the decedent’s estate. This period usually is at least a few months after the person’s death. If multiple creditors appear, most or all of the estate’s value that you believe is your inheritance could go to paying debts.
Inheritance tax is another item that could reduce your potential inheritance. The United States has no federal inheritance tax, but individual states may apply this tax.
The inheritance tax differs from any estate tax, which charges the estate as a whole. The inheritance tax applies to the person who inherits assets. Some states charge a higher tax rate for people who are not direct relatives of the decedent.
Protests
If some potential heirs do not like the assets they are receiving, they may protest the will or the court’s decisions. This can lead to lengthy legal challenges that tie up your expected inheritance for a long time.
Some creditors or heirs may challenge the validity of the will, too.
Trust Rockpoint Probate Funding for Help With a Cash Advance
If you are waiting for your inheritance because of delays in probate court that show no sign of ending, frustration is common. You may need access to your inherited assets sooner rather than later to pay off debts or make investments.
Reach out to Rockpoint Probate Funding for information on whether you should make use of our cash advance option. To discuss your situation for free, call us today at (888) 263-8588.
