Inheritance refers to the property a person bequeaths to his or her loved ones after passing away. An inheritance can include cash, investments such as stocks or bonds, and other properties such as jewellery, cars, paintings, antiques, and immovables.
How an Inheritance Works
The inheritance value can range from a few thousand pounds to several million. In most countries, heritage properties are subject to inheritance taxes, where beneficiaries may be saddled with tax obligations. The rates of an inheritance tax (sometimes referred to as a “death obligation” or “the last twist of the taxman’s knife”) depend on a number of factors, including the state of residence of a beneficiary, the value of the inheritance, and the relationship between the beneficiary and the decedent.
Note: An inheritance tax is distinct from a property tax which is a levy on the transfer of the properties of a deceased person. However, in most situations, estate taxes are not applicable to properties left to a spouse or to known charities.
Beneficiaries who have no family links to the deceased are usually subject to higher inheritance taxes than those who are closely linked to the deceased.
Beneficiaries vs. Heirs
A distinction exists between a “beneficiary” and a “heir” Beneficiaries refer to persons specified in a testament, while heirs refer to persons such as a child or a surviving spouse, who are entitled to receive property of a deceased, through “intestate succession,” a collection of rules established in the absence of a testament to settle inheritance matters.
Real World Example
Lisa Marie Presley has battled her ex-manager, Barry Siegel over accusations that he squandered her inheritance from her father, Elvis Presley. Her inheritance, according to the lawsuit, was worth $100 million. Siegel also countersued Presley for $800,000.
- An inheritance is a financial concept that describes the properties passed on to people when someone dies.
- Most inheritances consist of cash that is deposited in a bank account but can include securities, shares, loans, jewellery, vehicles, paintings, antiques, real estate and other tangible assets.
- Many that obtain an inheritance will be subject to inheritance tax, where the greater the inheritance tax is likely to be the more distant a beneficiary is to the decedent.