• The two primary inheritance laws in the U.S. are community property and common law.
• Making a will is a crucial step to ensure one’s estate is distributed according to their wishes.
• The probate process can take a long time and be complicated, but there are steps one can take to streamline the process.
• Ultimately, understanding the laws of your state and consulting with an estate lawyer is the best way to ensure your inheritance goes to where you want it to go.
• Additionally, understanding the basics of estate planning can help you avoid probate altogether.
If you’re like most people, you probably don’t give much thought to inheritance laws—until you need to. Whether you’re the one inheriting or the one doing the leaving, it’s essential to understand how inheritance works in the United States. Here are the vital things you need to know.
How Inheritance Works in the U.S.
There are two primary laws in the U.S. regarding inheritance laws: community property and common law.
The first is community property. This law applies in nine states, such as Arizona, California, and Idaho. Community property means that any assets acquired during the marriage are shared equally between spouses and must be divided if they divorce or one spouse dies.
Community property does not apply to the inheritance received by either spouse from his or her parents or other relatives. However, any assets acquired with the inheritance may become part of the community property if used jointly by both spouses.
The second law is called common law, which applies to all other states. Common law allows each spouse to maintain separate ownership of assets they own before the marriage and any assets received during the marriage from gifts or inheritances. This means that if one spouse dies, their separate property goes to an heir designated in the will.
Common law also states that each state has laws governing how much of a deceased person’s estate is subject to inheritance tax and when it must be paid. Therefore, it’s essential to consult with a lawyer familiar with estate law in your state to understand how inheritance works for you and your family.
Making a Will
Finally, making a will is essential if you want your estate distributed according to your wishes. A will allows you to designate who receives which assets and when they should receive them. It also allows you to name guardians for minor children and make arrangements for any pets.
It’s good to have the right kind of lawyer for this.
First, of course, there are estate lawyers who can help you. But if you have a decent amount of property, it’s good to have an experienced property attorney to review the details of your will and the properties you have. They can also put a value on your property, so it’s easier to divide it among heirs.
The Probate Process
Once it’s been determined how an estate will be distributed, whether by the two laws indicated above or by will, the process of distributing those assets can begin. In most cases, this process starts with probate—a legal proceeding through which a court validates a will (if there is one) and supervises the distribution of a deceased person’s assets.
Not all estates have to go through probate. However, small estates can be distributed in many cases without going through probate court. Additionally, some states have streamlined probate procedures for simple estates—for example, California has a “summary” process for small estates valued at less than $166,250.
Tips to Avoid Long Probate
In any case, there are a few steps people can take to streamline the probate process and avoid it altogether. These include:
Having a living trust in place is always good, which can help you avoid probate. This type of trust is created during the grantor’s lifetime and holds assets that are transferred to named beneficiaries upon death.
It’s also important to transfer many assets directly to beneficiaries while you’re still alive. You can change property titles to reflect that they are owned jointly with the beneficiary or by making gifts.
You should also designate beneficiaries on all your financial accounts, such as 401(k)s and life insurance policies. This will allow those assets to bypass probate and transfer directly to the designated beneficiary as soon as the original owner dies.
Inheritance laws in the United States may seem complex—and they can be—but understanding the basics is relatively simple. Also, remember that certain types of property (such as life insurance policies and retirement accounts) typically have beneficiary designations that supersede intestacy laws. So, it’s always a good idea to understand the laws in your state and consult with an estate lawyer if you have any questions.