Inheritance Rights: Everything You Should Know

Inheritance rights decide who has a legal right to claim the property and assets of another person when they pass away.

Most people have a limited knowledge of inheritance rights, whether they are in the process of creating a will to prepare for their own passing, or if a family member is trying to determine what they may inherit after the death of a loved one.

In this article, readers will learn why it is important to have a will, how it can be impacted by major life changes, what happens when a person doesn’t have a will, and what it means to live in a state that recognizes community property rights.

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What if a person doesn’t have a will?

If a person dies without a will, it may be possible to make a claim on their property and other assets by way of the concept of inheritance.

In general, only a spouse, registered domestic partner, or blood relative such as a child or grandchild can make an inheritance claim to a person’s estate. It is up to state courts to determine how to distribute a person’s property among those making a valid claim.

A spouse’s inheritance rights usually carry greater weight in the eyes of the law than the inheritance rights of children or grandchildren. It is also a myth that the eldest child of a deceased person has more right to an inheritance than any other children. 

The Importance of a Will

It is possible for a spouse and blood relatives to make a claim to a loved one’s estate not covered by a will, but it is far easier for everyone involved if the deceased has prepared a will prior to their death.

By leaving a will, the deceased can ensure their assets and property are divided as they truly wished, with one caveat: community property rights, which we discuss below. 

What is Community Property?

The special relationship of joint ownership of property between spouses is referred to as community property. In some states, the claim of community property rights can supersede even declarations made within a will. 

Community Property Rights by State

People who make a will should be aware that if they live in a state that acknowledges community property rights, their spouse is legally entitled to half of their earnings and property accrued during their marriage. These states include:

  • Idaho
  • California
  • Arizona
  • Texas
  • Washington
  • Wisconsin
  • New Mexico
  • Nevada
  • Louisiana
  • Alaska (Optional)

In other words, upon the death of any person living in the states listed above, their spouse may contest a will if it does not specify that they receive the full 50% of community property to which they are entitled to, by state law. Alaska is an opt-in community property state, which simply means spouses may or may not opt to have their property considered as community property.

In all other states, spouses may still contest a will and, in general, have the right to claim 30% of their deceased spouse’s property.

In summary, for those living in community property states, it’s important to draw up a will in a manner that will honor a spouse’s community property rights in order to avoid causing conflict.

Inheritance Rights of Ex-Spouses

Ex-spouses generally have no legal right to a deceased person’s assets, but it is still important to explicitly revoke any previous wills after a divorce is finalized in order to ensure an ex-spouse is removed from the will. A new will should be drafted after any divorce, with new instructions on how to distribute all property and assets. 

Inheritance Rights of Children & Grandchildren

Many people might be surprised to learn that if a person does have a will, yet they explicitly leave all of their children out of their will, their children do not automatically have a legal right to inherit anything from them.

Unlike the scenario where a person doesn’t have a will, but a judge assumes they would want at least some of their assets to go to their children, a will that specifically excludes all of a person’s children is considered to be a deliberate action made by the parent.

Therefore, if a remarried or single parent definitely wants their children to be given part of their property at the time of their death then they should specify each individual child in their will as a beneficiary of their estate.

In the case where a parent is still married to their children’s spouse, the deceased would most likely leave their assets to their spouse, then trust their surviving spouse to create a new will that would list all their children as beneficiaries. 

In the rare event a person has adopted a child who, due to an oversight, was never included in the parent’s will, most states would recognize the right of the adopted child to receive an inheritance in a manner similar to their siblings already listed in the parent’s will.

Is an inheritance taxable?

In some states, the recipient of an inheritance will be charged an inheritance tax (not to be confused with an estate tax).

How much the recipient pays in taxes will depend on the state they live in, the size of the inheritance, and their relationship to the deceased. The taxed amount can also depend on the state in which the deceased lives if the recipient and deceased don’t reside within the same state.

In general, a person who receives an inheritance can expect to pay anywhere from 0% to 18% of the value of the inheritance, depending upon these factors.

The following states have an inheritance tax:

  • Iowa
  • Kentucky
  • Maryland
  • Nebraska
  • New Jersey
  • Pennsylvania