Every state in the country has its own laws regarding wills and inheritance. It is important to know the laws regarding the inheritance of property and assets in your state. Kentucky’s inheritance laws provide a clear legal process for dividing an estate amongst the decedent’s heirs according to intestate succession or by the bequests outlined in the decedent’s will.
Do you have a plan for your property and assets? No matter your age or health status, it is never too soon to consider your loved one’s interests in the event of your passing. All adults over the age of eighteen have the right to make a will in Kentucky. However, many individuals put off drafting a will until it is too late. To learn more about your estate planning options, read the following guide and consult with a Kentucky estate planning attorney.
Does Kentucky Have an Inheritance or Estate Tax?
Kentucky has had no estate tax since January 1, 2005. There is, however, an inheritance tax levied on inherited property and assets. This means that Kentucky levies a tax on the heirs of the estate rather than the estate as a whole. Beneficiaries should be aware of the amount they will be taxed and how soon they must pay taxes on their inherited property.
The amount beneficiaries will be taxed depends on two factors: 1) the relationship of the beneficiary to the decedent and 2) the value of the bequeathed property. For example, the decedent's spouse, children, or parents are exempt from paying inheritance tax, while nieces, nephews, aunts, or uncles receive a $1,000 exemption and a 4-16% tax rate. The state also provides means of alleviating potential financial hardship from these taxes; for example, beneficiaries who pay the inheritance tax within nine months may be eligible for a five percent discount on their total inheritance tax. Additionally, beneficiaries of estates with more than $5,000 in tax liability can elect to pay the tax in ten annual installments.
However, these taxes do not apply to any properties outside the state. If you are a Kentucky resident and have inherited properties outside the state, you will need to learn more about the state’s relevant inheritance and/or estate tax laws. The reverse is also true: if you are not a citizen of Kentucky but have inherited property within the state, your inheritance will be subject to the above laws.
Dying With a Will in Kentucky
With a valid will, individuals have control over who receives their estate. The state of Kentucky considers a will valid if it is signed by the testator (the person who is making the will) and two witnesses. Creating a will allows you to select which of your heirs will inherit your property and assets. Along with designating the benefactors of your estate, your will must identify the individual who will act as your executor. Because the job of an estate executor is associated with important duties, your choice should be someone who is reliable and familiar with the estate (in most cases, testators appoint a close family member). Your executor will ensure all beneficiaries receive their portion of the estate and become responsible for any debts or liabilities associated with the estate.
What Happens if You Die Without a Will in Kentucky?
Dying without a will is also called dying in “intestacy.” Dying intestate means that you will be unable to choose who inherits your estate or how it will be divided among your heirs. Without a will, the probate court will divide your estate according to the following laws of intestate succession, and the state will appoint an executor of their choosing. If you have preferences on which of your heirs will inherit (and how much), it is in your best interest to ensure your estate is secured by a valid will.
Intestate Succession in Kentucky
When an individual dies without a will, Kentucky probate courts will divide the estate by the laws of intestate succession. The ordering of intestate succession in the state of Kentucky is prioritized as follows:
If there are no descendants, your spouse will inherit the whole of the estate.
If you leave behind a spouse and children, your spouse will inherit one-half of your personal property, one-third of your real property to use, and one-half of your real property to sell. The remaining half of your personal and real property will be divided among your children.
If you have no children, but your parents are living, your spouse will divide your estate with them (using the same formula stated above).
If you have living siblings but no children or living parents, your spouse will divide your estate with them (using the same formula stated above).
If you do not have a spouse or children, your parents will inherit the whole of your estate.
If you have no spouse, children, or living parents, your siblings will inherit the whole of your estate.
After these close relatives have been eliminated as potential heirs, the question of inheritance becomes complicated. If there is no spouse, child, parent, or sibling of the deceased, the probate courts will contact the next of kin.
Community Property in Kentucky Inheritance Law
Since July 15, 2020, Kentucky has allowed married spouses to classify some or all of their property as “community property.” This property is sometimes referred to as “marital property” because it applies to any assets gained during marriage. This principle applies to both property that spouses acquire together (i.e., large purchases such as a home or vehicle) and any income earned by either individual during the marriage.
If you and your spouse have combined your assets into a community property trust, your spouse will inherit all of your combined assets after your death. At that point, it is your spouse’s property to do with what they wish. For example, while a surviving spouse may often bequeath community property to the descendants of their deceased spouse, they are not legally obligated to do so.
Separate Property in Kentucky Inheritance Law
In Kentucky, any property or assets acquired before marriage or inherited by an individual are considered “separate property.” These assets remain your sole property even in the event of a divorce. In the case of inheritance, since your separate property does not legally belong to your spouse, it is generally divided amongst your closest heirs. Therefore, if you acquired property or assets before your marriage that you would like your spouse to inherit, it may be necessary to draft a will identifying them as your sole or primary beneficiary. Otherwise, your “separate property” will be inherited according to Kentucky’s intestate succession laws.
Spousal Rights According to Kentucky Inheritance Law
Spouses are privileged according to Kentucky’s intestate succession laws. The state’s “dower and curtesy” laws assure that your spouse will inherit at least half of your intestate property. If you have children, siblings, or living parents, they will inherit the remaining half; if not, your spouse will inherit the whole of your estate.
However, in some instances, spouses may forfeit their right to inherit. For example, if a spouse has committed infidelity, the courts will consider them ineligible to inherit their spouse’s property unless there is evidence the two reconciled before their death. Additionally, divorced spouses will receive no portion of the estate unless the decedent has specifically identified them as beneficiaries in their will.
Children’s Rights to Inheritance According to Kentucky Law
After the decedent’s spouse, children have the strongest claim to inheritance of the estate. If the decedent was not married at the time of their death, their children would inherit the whole of the estate. If the will does not state otherwise, every child of the deceased will receive an equal share of the property and assets.
The laws of intestate inheritance only apply to your “legal” children, i.e., your children as recognized by the state of Kentucky. Any biological children (including illegitimate children) will automatically inherit according to intestate succession. Children that have been legally adopted will have the same rights as biological children. If you have children that you would like to inherit a portion or the whole of your estate that are not considered your “legal children” (for example, foster children or stepchildren), you will need to make them beneficiaries in your will.
Single and Childless in Kentucky Inheritance Law
According to the laws of Kentucky intestate succession listed above, the estates of the single and childless will pass to the deceased’s parents or siblings. If the individual is estranged from their parents and/or siblings or does not have any living family, however, the question of inheritance can become complicated.
Some individuals may not feel the need to make a will if they will not leave behind a spouse or descendants. However, if you would like to make arrangements for other family members, individuals, charities, or organizations to inherit your estate, you should consult with an estate planning lawyer.
Non-Probate Kentucky Inheritances
The term “probate” refers to the legal processes enacted after an individual’s death to settle the division of property and assets. Assets that do not pass through the probate process (“non-probate assets") are not affected by intestate succession laws. For example, the following assets are considered non-probate inheritances:
Transfer or pay-on-death accounts
Life insurance policies
Joint tenancy property
Unique Situations in Kentucky Inheritance Law
While the above information acts as a general guide to Kentucky inheritance law, some unique situations may complicate or invalidate the above principles. If you anticipate any questions regarding the inheritance of your estate, you should consult with a qualified estate planning attorney to ensure your last wishes are clear to your family and the courts.
Mandy Jo’s Law
In many states, some laws prevent unworthy parties from benefiting from the death of their close relative. Kentucky passed a law known as “Mandy Jo’s Law” that prohibits parents who have abandoned their child from being considered in the intestate succession. However, there are two ways parents can reclaim their right of inheritance, including:
Resuming care and/or custody of their child at least a year before their death
Paying child support according to court orders
In some cases, relatives born after the death of the decedent can be considered heirs of the estate. For example, a child born less than ten months after the death of a decedent will have all the inheritance rights of the decedent’s other children. Additionally, siblings, nieces, or nephews born after the decedent’s passing may be considered heirs according to Kentucky intestate succession laws.
Rights of Non-Citizens
In Kentucky, non-U.S. citizens, regardless of legal status, have the same inheritance rights as U.S. Citizens. For example, if a decedent has two children who are U.S. citizens and two who aren’t, all four will receive an equal share of their parent’s property and assets. This principle also applies to non-U.S. citizens who are living in Kentucky at the time of their death.
How Long Do You Have to Contest a Will in Kentucky
Potential heirs with a legitimate claim for contesting the will can do so by filing a complaint at the circuit court level within two years of the district court’s approval of the will. Any complaints filed within these two years will be heard, but it is in your best interest to act as soon as possible: filing a complaint within a year means that the distribution of the estate will be frozen until your complaint is approved or denied. If the executors of the estate have already distributed property and assets to the stated beneficiaries, it is less likely that your claim will be accepted.
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