Probate & Inheritance Tax
The named executor of a deceased person's estate has to apply for probate--the legal right to administer the estate. The executor will have to have the estate valued to determine whether any tax is payable on the proceeds of the estate. If tax is due it is usually paid by the executor before distributing any of the deceased person's bequests.
Other People Are Reading
-
Probate
-
In the United States, probate means to prove that a will is valid. In most states the person would petition the court for probate and add the will to their petition. Once probate is approved the petitioner then has legal title to deal with the deceased person's estate. Not all states have probate courts.
In the United Kingdom, probate is where an individual makes an application to administer a deceased person's estate. The term probate may be used differently depending on whether the person who died left a will. When someone makes a will they usually name someone as their executor--the person who deals with the will. The executor then has to go to court to apply for a "grant of probate."
Inheritance Tax
-
Inheritance is what a person received from the estate of a dead relative. Inheritance tax is taxation on what a person has inherited. In America not everyone pays inheritance tax as an estate has to be worth a certain amount of money before the government is entitled to any tax. If the estate is large enough, then the person having probate may have to pay a state death tax and a federal estate tax. In addition to these taxes those individuals who receive an inheritance could be required to pay state inheritance tax.
In the United Kingdom, any estate that is valued at less than 325.000 pounds is tax exempt. Tax is taken on the estate as a whole rather than on individual bequests. Sometimes inheritance tax is due on gifts that are made while the giver is alive.
-
Features
-
In the United States, inheritance tax is paid by individuals who receive an inheritance, but inheritance tax does not apply in most states. In states like Nebraska, Indiana, New Jersey and Tennessee, inheritance tax can be as low as 1 percent of the inheritance and as high as 50 percent. Inheritance tax is charged on property and is different than estate tax.
In the United Kingdom, inheritance tax is usually paid by the executor, the person who is administering the estate, out of the estate's funds. If money is in a trust fund, then the trustees would pay the inheritance tax on monies that are held in trust for someone. Although it is unusual, there are occasions where someone who inherits would pay tax on that inheritance.
Benefits
-
When a person dies and leaves a will, probate is straightforward in the United States.
If a deceased person leaves a legal will and names an executor, then it makes probate a straightforward process. The named executor can refuse to deal with the estate, in which case a second named person can apply for probate.
Considerations
-
In most states in America, if a person dies without leaving a will then the probate court may appoint a family member or close friend as an administrator.
In the United Kingdom, if a deceased person does not leave a legal will, then a blood relative can apply to administer the estate. A person who dies without leaving a will is judged intestate and the nearest blood relative would have priority when it comes to administration.
-
References
- Photo Credit signing a contract image by William Berry from Fotolia.com
