Inheritance rules vary by country and state, but usually involve taxation, presumptions about who should inherit, and requirements for distribution and record-keeping. Lawyers may help with tax planning and disputes over unequal inheritances. Legal heirs have probate rights, and distribution documents must be filed and registered.
More often than not, inheriting something isn’t as easy as a simple transfer upon death. Every country in the world, and within many countries, states and provinces, sets certain rules and regulations that must be followed when dividing property. Some of these rules are designed to tax inheritances, while others are in place to protect the inheritance rights of heirs such as children and surviving spouses. The set of rules and restrictions placed on inheritances are collectively known as inheritance rules.
Succession rules are not universal and can actually be very different from one country or state to another. However, most schemes usually have a few things in common. First, inheritances are almost always taxed. Second, most succession rules make presumptions about who should be included in any hereditary distribution. Finally, there are usually specific requirements regarding who can do the distribution and how distribution records should be stored.
Taxes on inheritance distributions can be quite high and generally apply to all estate distributions, not just cash. A person who inherits a home, for example, might find that he owes his government anything from 10 to 40 percent of the home’s value in inheritance taxes, which are different from property or land taxes. Lawyers and estate planners often look for ways to help clients distribute assets in such a way that beneficiaries can escape some of the tax consequences imposed by probate rules. Most of the time, however, tax planning needs to be done before a person dies and before the property is distributed.
The services of lawyers may also be required if some relatives, especially spouses or children, do not receive an inheritance or receive significantly less inheritance than others. Most probate rules assume that all legal heirs will receive equal distributions. A legal heir is someone the law recognizes as a direct descendant or spouse. Legal heirs automatically have probate rights under most probate rules.
It is usually assumed that all living children, for example, deserve a share of a parent’s estate, unless there is a very clear written disinheritance in a will or other instrument. It is usually assumed that surviving spouses also receive some, if not all, of the estate in the event of their death. Inheritance that disqualifies one or more people can usually be challenged in court, and in some circumstances, the rules governing the inheritance can override what a person has written in a will.
Storage and reporting is also an important part of most inheritance rules. Copies of wills and other distribution documents must usually be filed in a court, usually in the jurisdiction where the owner of the estate died. If there is an estate that has not been named in any records but has nevertheless been distributed, that too must typically be registered, often with an probate court. Most of the time, this is handled by the executor. The executor also usually has to register all distributions with the local tax office. The rules on filing place, completeness and deadlines are set forth in the state probate laws, federal probate rules or other applicable laws.
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