For most people, family and finances are two areas of significant importance. In order to safeguard financial assets and ensure loved ones receive what you intend, you absolutely need an estate plan. However, navigating inheritance laws can be a minefield. Estate law, or probate law, is a broad area of law that deals with matters relating to an individual's estate after their death, including property distribution, debt settlement, and tax obligations. Notably, U.S. inheritance regulations can differ significantly from state to state, often creating considerable complexity for heirs, executors, and legal and tax professionals. Therefore, it’s imperative to include each of your financial, legal, and tax professionals in your estate planning process -- it's vital in determining how your estate and heirs may be impacted. Here are some key areas to consider: Intestacy laws: Intestacy laws can vary from state to state and come into play when a person dies without leaving a will (which dictates how assets are divided amongst their next-of-kin). Different states have different rules determining the division of assets, which is particularly significant for unmarried partners, stepchildren, and others not recognized as heirs. Estate taxes: Not all states in the U.S. impose an estate tax; some have no estate taxes, while others may levy a tax of up to 20% of the estate's value. States like New York, Massachusetts, and Oregon impose estate taxes, while others like Florida and Nevada don't. Some states even have inheritance taxes levied on the estate's heirs, which can also vary widely from state to state. Community Property: The concept of community property also varies across the country. In several states, such as California and Texas, spouses treat all marital property as homogeneously owned. Conversely, states that follow the common law principle regard property acquired before the marriage as belonging to the individual unless transferred into joint ownership. Probate: The probate process is another component that may impact an estate since it differs from state to state. Probate is the legal procedure through which a deceased person's assets are validated, debts are paid off, and assets are distributed to heirs. Some states may have a complex and lengthy probate process that can take months or even years, while others have simplified probate procedures (particularly for smaller estates). Spousal rights: The rights of surviving spouses may vary among different states. In some jurisdictions, the deceased spouse has the right of disposition over their separate estate. In other states, the surviving spouse has a legal claim to a portion of the deceased spouse's property, regardless of their situation. This legal claim is often called the "elective share" or "statutory share." Configuring a plan that aligns with your state's regulations can help ensure that the distribution of your estate aligns with your wishes. I can partner with your tax and legal team to build an effective estate plan that targets your unique goals and needs. I'm passionate about helping families address their financial needs today, tomorrow, and in the long term. If you have questions about your current plan -- or need help putting together a new estate plan, please call me at (804) 665-1589 or e-mail me at kmurphy@capfs.com. You may also access my Outlook calendar at https://go.oncehub.com/kylemurphy. I'm here to help.
The information presented in this article is general and not intended as advice. Specific conditions may apply based on your situation, state of residency, and that of your heirs. Consult your tax or legal professionals with questions about your unique circumstances. |
Do You Know Your State's Inheritance Laws?
