Inheriting money or property through an established living trust or a last will can be a difficult process to navigate even though the two processes are quite different from each other.
The process associated with inheriting assets through an established living trust differs from the process used for inheritance through a will. When you inherit money or property through a will, the contents of the will must first go through the probate process before money or property can be distributed. If you have inherited money through a will, it may take longer to receive this inheritance than it would if you inherited through a living trust.
When you inherit through an established living trust, whether it be money or property, you gain access to your inheritance immediately due to the terms outlined in the trust deed. This eliminates the need for initiating probate, which can be a lengthy process. The probate process involves hearings, and an executor of the will must distribute the contents once the hearings have been completed. More information about how you can process your inheritance is covered below.
Knowing what to expect when you inherit money or property is contingent upon whether you are inheriting from an established living trust or from a will. Once this has been determined, you can take the steps necessary to understand the asset administration.
The executor of an estate must take an inventory of all assets listed within the will or the established living trust. These assets include:
The executor must have a definitive idea of all assets contained within the will or living trust before asset distribution can take place. Once the assets have been calculated, the executor must then complete the process of receiving any debts owed to the deceased, such as a final paycheck from the individual’s employer. This may or may not affect the total cash assets obtained during this stage depending upon the size of the debts owed.
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In addition to collecting owed debts, the executor must pay any creditors to the estate before the distribution of money or property can be made to those who have inherited from a trust or a will. If there is not enough money in the estate to pay down estate creditors, the executor must sell assets of the estate to make these payments. This can affect the amount you receive depending upon whether your assets have been sold to compensate for the cost of estate creditors.
Finally, an executor must pay estate taxes before distributing money or property to the living heirs of the estate. If there are taxes due on the estate, the executor must pull money from the estate’s assets to pay these costs. This can directly impact the amount you receive from the estate if there is a significant amount of money needed to address any outstanding taxes.
In some circumstances, completing litigation for a will or an established living trust may be necessary if someone contests the validity of these documents. Individuals or companies may seek assets from the estate if they are owed money from the deceased individual. These claims must be addressed through litigation to ensure any owed debts are paid before you can receive the money or property you were promised in the will or trust.
You may need to undergo the process of litigation if a relative of the deceased comes forward and claims he or she is owed assets from the estate but was not expressly named in the will or living trust. When this occurs, litigation must take place to establish what the party is entitled to.
If a relative’s claims to an estate are found to be legitimate, he or she is paid from previously established estate funds. Individuals or companies seeking money for an owed debt are additionally paid through these estate funds, though litigation must be completed before payments are made to ensure the funds and property are going to the right individuals. Depending upon the legitimacy found in these claims, you may receive less than what you were originally expecting when you became an heir to an estate.
Once the legal proceedings have been completed, the executor can begin the process of distributing the inheritance between the named heirs. The terms of the will outline how the estate is to be distributed to the heirs.
During this process, you receive either the money or the property you were granted through the terms of the will or the living trust. This can be cash, property or other assets depending upon the nature of the conditions outlined within the estate. For example, you may receive your inheritance in the form of stocks and investments if the deceased determined this is how he or she wanted you to receive your money.
If the funds for the estate have been severely depleted due to creditor payment, the court may choose to authorize the executor of the will or living estate to liquidate the remaining assets. Liquidating assets means the executor must sell a substantial item, such as a house previously listed in the estate, to obtain the money necessary to distribute the inheritance among the heirs. If you inherited the home that the executor must sell to accomplish this task, you may need to speak with the court about alleviating this process.
Once liquidation has finished, the executor can then complete the process of distributing the inheritance among the named heirs and any relative who was found to have a legitimate claim to the estate. It is important to note that if the liquidation of assets has failed to raise the money needed to pay your portion of the will or trust, you are going to receive less than you originally anticipated.
In rare cases, the estate is found to be insolvent after paying off creditors and liquidating assets. This means you do not receive any money or property you are promised in the will or established living trust.
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