The term inheritance refers to the Assets, properties, possessions, and sometimes, Debts and Liabilities that are "passed on" from a deceased person to their Surviving Family, Heirs or other designated Beneficiaries.
In other words, an inheritance consists of the assets and wealth that a person leaves behind after their death. It can include real estate property, money, investments, and other personal belongings and valuables.
The transfer of an inheritance typically occurs during Probate, a state court supervised process in which the deceased's assets are Distributed according to instructions written into their Last Will and Testament, Trust, or if neither exists, state Laws of Intestacy.
Inheritance is a key component to the Estate Administration process, determining how a deceased person's assets will be given to their loved ones and designated recipients.
Key points to understand about inheritance in the context of estate administration:
Distribution: An inheritance encompasses various types of assets, including real estate, personal property, financial accounts, investments, businesses, and more. These assets are distributed among beneficiaries or heirs as specified in the deceased's Estate Plan
Beneficiaries: Beneficiaries are people or entities who are designated to receive an inheritance. They are typically named in the deceased person's will or trust, and are entitled to their share of the assets based on those document's instructions.
Intestate Succession: When a person dies without a valid will, the distribution of their assets is determined by the state specific laws of Intestate Succession. These laws vary by jurisdiction and dictate how, and in what order, assets are distributed among surviving family members, such as spouses, children, parents, and siblings.
Executor or Administrator: An Executor (if there's a will) or Administrator (if there's no will or no appointed executor) is responsible for managing the deceased's Estate and ensuring that the inheritance is distributed according to the estate planning documents or applicable laws.
Debts and Liabilities: Before beneficiaries can receive their inheritance, the estate's Debts, taxes, Liabilities, and other obligations must be settled. Only then can remaining assets be distributed to beneficiaries.
Disposition of Property: Inheritance might include specific Bequests (gifts) outlined in the deceased person's will, as well as the general distribution of remaining assets among beneficiaries.
Minors and Incapacitated Beneficiaries: If beneficiaries are Minors, or adults under Guardianship because they are incapable of managing their own affairs, special considerations may be required to manage their inheritances on their behalf.
Effective estate planning involves clearly defining how an inheritance will be distributed among beneficiaries. It helps ensure that the deceased person's wishes are followed and that the distribution process is as smooth as possible.
When creating an estate plan and drafting an inheritance plan, it's best to work with an Estate Attorney to ensure it's made in accordance with state law and properly expresses the wishes of its creator.