What is Inheritance? Everything You Need to Know

Inheritance is the process by which an individual receives assets, titles, debts, rights, and obligations upon the death of another person. These assets can include property, money, investments, jewelry, and other valuables.

In this guide, you'll learn:

The different types of inheritance.
The legal aspects of inheritance.
The emotional and financial implications of inheritance.

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John Ramsey

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Updated on

June 27, 2024

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Glossary

Inheritance

Types of Inheritance

There are two main types of inheritance:

Testamentary inheritance: This occurs when assets are distributed according to the deceased person's will. A will is a legal document that outlines how the person wants their assets to be distributed after their death.
Intestate inheritance: This occurs when a person dies without a will. In this case, assets are distributed according to state law, which typically prioritizes spouses, children, and other close relatives.

Legal Aspects of Inheritance

The legal process of inheritance can be complex, involving probate court, executors, and potential disputes among beneficiaries. It's essential to understand the laws governing inheritance in your jurisdiction and to consult with an attorney if needed.

Emotional and Financial Implications of Inheritance

Receiving an inheritance can be a significant life event, both emotionally and financially. It's important to consider the tax implications of inheritance and to plan for how you will manage the assets you receive. Inheritance can also bring up complex emotions, such as grief, guilt, and family conflict. Seeking support from a therapist or counselor can be helpful during this time.

If seeking a licensed professional, consider our services. Our insurance advisors and client support team are here to assist you with your insurance needs.

Conclusion

This guide has offered a comprehensive overview of inheritance. For those seeking to deepen their understanding, we recommend exploring our guide on estate planning, which dives into wills, trusts, and other tools for managing your assets after your death.

Inheritance FAQ

What is the difference between a will and a trust?

A will is a legal document that outlines how a person wants their assets to be distributed after their death. A trust, on the other hand, is a legal arrangement in which a person (the grantor) transfers assets to a trustee, who manages those assets for the benefit of one or more beneficiaries. While both wills and trusts can be used for estate planning purposes, they have different characteristics and can be used in different situations.

What happens if someone dies without a will?

If someone dies without a will (intestate), their assets will be distributed according to state law. This is called intestate succession. Generally, the deceased person's spouse and relatives will be entitled to a share of the estate.

What are the tax implications of inheritance?

Inheritance taxes vary depending on the state and the value of the estate. In some states, there is no inheritance tax, while in others, the tax rate can be quite high. It's important to consult with a tax professional to understand the tax implications of inheritance in your situation.