Take care of the estate's bills and taxes. Before you may collect an inheritance, the deceased's obligations must be settled from the estate's assets. The probate laws of each state provide a priority list for settling claims against an estate. If an estate is small, you may be able to pay these claims in full out of your own pocket. But if the estate is large, you may have to seek outside help.
If there are any unpaid debts, the executor should work with creditors to try to settle them before distributing the remainder of the estate. If debts cannot be settled this way, they will have to be paid from the estate before any distribution can be made.
The executor should also attempt to collect any overdue accounts receivable. If there are no other assets available to pay claims, people will have to wait until after the estate has been closed to file lawsuits against the decedent or his or her heirs.
In most states, an heir cannot receive an inheritance until all legal claims against the estate have been resolved. If you know of someone who has died without making any provision for another family member, you should tell someone about the death so that the person does not spend time and money trying to collect an inheritance that may never come through.
The only way to be sure you get everything due you is by filing a claim.
Estate administration charges, such as appraisal fees, court fees, and attorney's fees, are often paid first. Other claims may be paid only if there is no enough money left over after these expenses have been taken care of.
State law also requires that any unpaid inheritance be distributed in a reasonable time after the death of the decedent. If it is not, the person who failed to get his or her share of the estate may file a lawsuit to recover it. The courts will not allow anyone to delay collecting an inheritance by arguing that they should have been notified about the death or that they were not aware that they had an interest in the estate.
In most states, you can choose how your estate is distributed after debts and taxes have been paid. You may want to leave everything to your spouse. Or, if you have children from a previous marriage or relationship, you may want to leave them part of your estate. You may also have an option called "inter vivos trust" which means "in living memory." With this type of trust, the trustee will distribute funds to the beneficiaries during their lives only. Once they die, the remaining assets go back into the estate for other people to claim.
You do not have to pay inheritance tax on your own money as an executor. If you require an executor's loan, contact a bank as soon as feasible. You must be prepared to supply them with information on the estate's assets and liabilities (debts). Check with the Inland Revenue Office about whether there is any inheritance tax due on the estate.
1. Determine who, if any, will be the executor of the will. 2. Examine the tax regulations in the jurisdiction where the assets are located. 3. 3. Consult with a tax professional to establish if you will be required to pay an inheritance tax. 4. Transfer your inheritance to your retirement or bank account without using a bank. 5. If you have a large inheritance, consider transferring some portion of it into a separate account that will accumulate income. Use some of this income to offset the taxes on the principal of the estate account.
There are several ways to transfer an inheritance. Which method is best depends on your situation. It may help to think of an inheritance as cash that must be transferred in some form. There are many ways to do this. You just need to pick one that works for you.
Here are the most common methods for transferring an inheritance:
1. Directly from one party to another - This is the easiest method because there are no intermediaries involved. Your recipient simply receives the money directly from you. However, direct transfers can be difficult if there is not much money or if you want your recipient to have time to use the funds before they are paid.
2. Through a third party - In this case, you send money to a third party (usually a bank) who will then distribute the money according to your instructions. These parties act as intermediaries and their fees usually cover the cost of administering the transaction.