South Dakota Inheritance Laws

In the United States, 67% of people do not have an estate plan in place, which means that they have no clear strategy for distributing their assets after death. An estate plan gives individuals more control over how their property and assets will be distributed to their chosen beneficiaries. However, even with an estate plan in place, the probate process may be required to transfer certain assets and settle outstanding debts of the deceased. Some types of assets, though, can bypass probate and be transferred directly to designated beneficiaries. In South Dakota, the probate courts settled an average of 2,580 deceased estates annually from 2018 to 2022.

For individuals who want to reduce complications during probate while safeguarding their potential heirs’ rights, learning how inheritance laws work would be a valuable undertaking.

In that regard, this article aims to help the residents of South Dakota understand the importance of estate planning and the probate process, ensuring that their property and loved ones will be taken care of in the future.

What Happens If Someone Dies With a Will in South Dakota?

Residents of South Dakota who pass away with a valid will and testament — also known as dying testate — will have more control over how their assets will be distributed.

A will should explain where a person wants their assets to go and what they want to happen to their property in the event of their death. In most cases, a will also mentions the estate’s personal representative. It encourages a stable transfer of assets from the estate’s owner to their beneficiaries.

For a will to be considered valid in South Dakota, it must meet specific requirements. The maker of the will (also known as the testator) must be of sound mind and should be at least 18 years old at the time of the document’s creation. Moreover, the will should be in writing, and its creation must be witnessed by two people who have affixed their signatures to the document.

In certain cases, a holographic will may be legally accepted in South Dakota. It is different from a standard will because it is done in the testator’s handwriting and in the absence of witnesses. To be considered valid, the testator just needs to place their signature and the important sections of the document in their handwriting.

Contesting a Will

In South Dakota, a will can be contested by an “interested person” who believes that the document is not valid. According to state law, an interested person is someone with any of the following relations to the deceased person:

• Spouse.

• Child.

• Heir.

• Will-designated beneficiary.

• Creditor.

Creditors are considered interested parties since they have the right to collect payment if the owner of the estate passes away without paying their debt.

Some of the valid grounds for contesting a will in South Dakota are:

• Forgery.

• Clerical or procedural errors in will creation.

• Invalid signatures of the deceased and witnesses.

• Disputes on the testator’s mental capacity when making the will.

• Invalid changes to the will.

If someone determines that they have grounds to contest a will, they may proceed with the following steps:

1. Court petition: To officially begin the process, the contestor must file a petition with the court and indicate their grounds for contesting the will.

2. Discovery stage: This is where the parties involved gather and exchange relevant information.

3. Alternative dispute resolution: Disputing parties may pursue a non-court alternative method, such as mediation, to settle the case.

4. Trial: If a settlement is not reached, the case may go to trial, where the court or a jury will decide how to resolve the issue.

5. Appeal: The case can be appealed to the South Dakota Supreme Court if one party is not happy with the result of the trial.

Throughout the process, it is in one’s best interest to consult a probate attorney to understand all legal options and obtain assistance in dealing with negotiations, claims filed by creditors, and court trials.

What Happens If Someone Dies Without a Will in South Dakota?

A person who passes away without a will — also known as someone who dies intestate — will have the distribution of their assets subject to the state’s intestacy laws.

The probate court will decide who gets to inherit their assets and how much the heirs are entitled to receive. It will also appoint a personal representative to distribute the property to the deceased’s closest living relatives, such as their spouse, child, sibling, or parent.

Spousal Rights

The share of a deceased person’s spouse can be affected by the following:

• The number of children the deceased left behind.

• How the spouse is related to the children of the deceased.

According to the state’s common law inheritance system, property ownership is determined by whose income paid for it or whose name is on a property’s title. This means a property is not automatically shared by the couple. However, the spouse of the decedent can get all assets if the deceased did not have a valid will and did not have a child from another marriage or relationship.

Meanwhile, if the decedent had at least one child with someone other than the spouse, a different arrangement would take place. Here, the spouse will inherit the first $100,000 and half of the balance, while the remainder will be split between the children.

Children’s Rights

As stated in the previous section, no portion of the intestate property will be distributed among the children if their deceased parent had a surviving spouse and did not have children with someone else. Meanwhile, if an individual passes away without a will and a spouse, their children are entitled to inherit all of their assets.

Foster children and stepchildren, on the other hand, will not automatically receive a share unless they were legally adopted. This is because legally adopted children have the same rights as a decedent’s biological children.

According to state legislation, if a person passes away before the birth of their child, that child may still receive an inheritance. This is only if they are born within 10 months of their parent’s death and survive for at least 120 hours after their birth.

Children born outside of marriage may receive a share of their deceased parent’s estate if their parents eventually got married or if paternity was acknowledged in writing or proven under South Dakota law.

A child who was legally adopted by another family after being placed for adoption by their biological parents will not be able to receive an inheritance from their biological family. The exception to this is when the child was adopted by the decedent’s spouse, birth grandparent, or a descendant of their birth grandparent.

The Rights of Other Surviving Relatives

According to state law, dying intestate in South Dakota means the deceased’s closest living relative will inherit their estate. If a person passes away without a child and a spouse, or if part of their estate will not pass on to their spouse, their assets will be transferred to their living relatives following the order below:

• Parents.

• Siblings. 

• Paternal and maternal grandparents.

• Aunts and uncles.

Estates With No Heirs

If a South Dakota resident passes away without a will and surviving relatives, their property will be forfeited to the state in a process known as escheat.

Transferring a decedent’s property to the state is considered an unlikely occurrence. This is because South Dakota inheritance laws are designed to distribute a deceased person’s assets to their relatives, even distant ones.

Unique Situations in South Dakota Inheritance Law

Disinherited Spouses

Residents of South Dakota cannot completely disinherit their surviving spouse unless they both agree to it. The decedent’s spouse can contest the will if they believe they were left with very little to no assets. They can take matters to court and claim an elective share of the estate. An elective share can prevent their disinheritance by giving them a fixed portion of the decedent’s property.

The amount of elective share the spouse can claim is usually determined by the number of years they have been married. It could range from 3% for marriages that lasted less than two years to 50% for marriages that persisted for 15 years or longer.

Non-citizen Heirs

According to South Dakota law, a potential heir does not need to be a U.S. citizen to be able to inherit from a deceased resident of the state. A potential heir only needs to meet the requirements previously discussed in the article to be entitled to the decedent’s property.

Half-Relatives

Half-relatives are treated the same way as whole relatives. This means they have the same right to inherit property as full-blooded relatives.

Decedent Murdered by Heir

If a potential heir is proven guilty of murdering a decedent, they forfeit their right to inherit property. Based on the slayer rule, a murderer must not be able to profit from their unlawful action.

Advancement

According to South Dakota law, if the testator gives property to a relative, the value of that property will be subtracted from the relative's inheritance. This happens if the testator and the heir both declare in writing that it is an advancement.

Probate in South Dakota

The transfer of a deceased person’s assets and property to their heirs and designated beneficiaries happens during probate. In South Dakota, this process is typically classified into either of the following categories:

• Informal probate: This does not involve the supervision of the court and is typically used in cases where there are no anticipated disputes.

• Supervised formal probate: Here, the whole probate process will be overseen by the local probate court.

• Unsupervised formal probate: This type of probate has only parts of the process supervised by the court.

The types of assets subject to the procedure include: 

• Investments: These include bonds, stocks, and mutual funds owned by the deceased. 

• Solely owned property: This refers to assets owned only by the deceased that have no designated beneficiaries. Houses, cars, bank accounts, business interests, and personal belongings are some examples.

• Tenant in common property: The share of the property owned by the deceased as a tenant is subject to probate.

However, not all kinds of property can be subject to probate. Some assets that may be transferred to the beneficiary without needing to go through the process include:

• Trust assets: Assets that have been placed in a trust can be distributed to named beneficiaries without the court’s supervision.

• Jointly owned property: These are assets that are equally owned by two or more people. If a joint tenant passes away, their share of the property will automatically be passed on to the surviving joint tenants.

• Transfer-on-death accounts: Transfer-on-death and pay-on-death designations can be transferred to the beneficiary upon the account owner’s death.

• Life insurance policies: Retirement accounts and life insurance policies do not need to go through probate if there is already a named beneficiary.

• Personal property valued at $50,000 or less: This does not need to go through probate to be passed on to the surviving spouse. It can also be transferred to the beneficiaries with a simple affidavit, as long as no other probate proceedings have been started.

The Probate Process

The probate law in South Dakota requires the proceedings to be started within three years of an individual’s death. An exception to the time limit can be made if there is sufficient doubt as to whether a person has passed away.

The probate process typically involves:

1. Filing a petition: A family member or the estate representative needs to file a petition with their local court to admit the will to probate. The court will appoint an estate administrator if the deceased does not have a valid will.

2. Notifying heirs: The estate representative or administrator must provide notice to the heirs under the will or to the statutory heirs if there is no will. Notice should also be given through local publications to inform potential creditors.

3. Taking inventory of the estate: The representative or administrator will assemble and evaluate all of the deceased’s assets.

4. Paying off debts: The deceased’s debts and financial obligations are paid off using the estate’s funds.

5. Distributing the remaining assets: After settling the deceased person’s debts, the remaining assets are allocated to the designated beneficiaries and heirs.

Does South Dakota Impose Inheritance and Estate Taxes?

South Dakota does not impose an inheritance or estate tax. An inheritance tax is typically imposed on the heir after they have received the inherited assets. In contrast, an estate tax is levied on the total value of the deceased's estate before it is distributed to heirs, with payment due within 9 months of the decedent's passing in most cases.

As such, the heirs of a South Dakota resident do not have to pay taxes that are specific to transferring ownership of a property. However, South Dakotan heirs may need to pay estate and inheritance taxes if the deceased estate owner lived in or owned property in a state that imposes these charges.

Moreover, heirs should be aware that there is an applicable federal estate tax if an estate’s value reaches a certain threshold. As of 2023, estates worth at least $12.92 million are subject to the federal estate tax. Note that the tax rate can range from 18% to 40%.

Legal Resources Related to Inheritance Law in South Dakota

The South Dakota Attorney General’s Office

The South Dakota Attorney General has an online resource that explains common estate planning tools. It discusses the rules and regulations on wills, probate, living wills, trusts, and powers of attorney. Locals may benefit from this resource if they want to learn more about probate terms and related proceedings in South Dakota.

SD Law Help

SD Law Help is a website created and supported by the efforts of three legal service providers — Access to Justice, Dakota Plains Legal Services, and East River Legal Services. It offers legal assistance to low-income individuals in the state. Its website also has a section on last wills and testaments in South Dakota, which discusses matters like the validity of a will and the kinds of assets that may be included in the document. Fill out and submit the online intake form to apply for free legal assistance.

South Dakota Consumer Protection

The South Dakota Consumer Protection website provides educational materials to people in the state, helping them be better prepared against misleading and false trade practices. People with concerns related to inheritance law may find its online resource on wills and trusts useful. It explains the restrictions wills in South Dakota have and their importance when transferring ownership of a property.