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Nebraska Inheritance Laws

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One interesting case in Nebraska is the estate issue of a high-net-worth businessman, Aaron Marshbank, who had fraudulent cases worth over $30 million. These include unpaid loans to over 15 banks and debts to the University of Nebraska Medical Center, which were discovered when his estate was assessed after his death. 

Due to several lawsuits pursued against Marshbank, his personal representative had a hard time collecting assets across the country and in Puerto Rico to find ways to pay all entities who his estate owed. Another noteworthy issue on the Marshbank estate was the dispute over who would be the recipient of the $3.5 million life insurance proceeds: the surviving spouse or creditors. 

While the Marshbank case is an important lesson for the public on the importance of proper estate planning, it also urges us to gain a basic understanding of Nebraska’s inheritance laws. 

Note that Nebraska still imposes an inheritance tax and uses it as a local revenue source, which directly impacts businesses and agricultural farms and decreases economic growth. However, lawmakers have been trying to reform the inheritance tax and modernize Nebraska’s code for over 40 years but have failed to do so.  

Nebraska’s complex inheritance laws can be a difficult process for surviving family members and estate representatives. Nebraskans are advised to educate themselves and seek assistance from a probate attorney.

This article provides information on Nebraska inheritance laws, covering how to contest a will, the surviving family members' rights to the estate if there is no will, and how much they must pay for inheritance tax. 

What Happens if Someone Dies With a Will in Nebraska?

In Nebraska, a valid will must be in writing, which can be handwritten, partly in pencil or ink, partly typewritten, or printed. It must indicate the date of the writing or signing and be signed with the testator’s name and at least two witnesses’ names. 

A testator is someone who writes a will, decides who to give their property to, and provides instructions on how their minor children must be supported if they pass away. They must be 18 years old or older and have the testamentary capacity or sound of mind to create a will. Also, when drafting the document, they must:

  • Recognize their natural beneficiaries.

  • Know the extent and value of their assets.

  • Be aware of the disposition being made.

  • Understand how these are related to creating a plan to divide properties. 

Meanwhile, a witness can be anyone competent enough to observe the will's completion and acknowledge the testator’s signature. They are not required to investigate whether the testator is mentally capable before they sign as a witness to a will. They must also not be named as beneficiaries. However, a will cannot be declared invalid if the witness is also a beneficiary, so long as there is one witness who is not. 

In Nebraska, a will usually contains a written statement or a list of items to be distributed to the beneficiaries according to the testator’s wishes. These items may include personal property, securities, evidence of indebtedness, documents of title, and properties used in business. 

Notarization is not a requirement of a valid will, but it is a necessary step to a self-proving will, which can expedite the probate process. This is because, with a self-proving will, there is no need for witnesses to sign an affidavit or for the court to contact the witnesses. 

On the other hand, a holographic will (a handwritten one) is considered valid, provided the following elements are handwritten: 

  • Date (even if it is only a month or year).

  • Signature (even if it is only the testator’s initials).    

  • Assets to be given and the donative and testamentary intent.

Nebraskan testators may deposit a will with the court for safekeeping and pay appropriate fees. Once the court has been notified of their death, it will deliver the will to an authorized individual upon request or to the right court. Their guardian or conservator must file an Authorization to Withdraw Will Form to examine the deposited will. 

Individuals have the right to appoint a personal representative, or PR, who must oversee, administer, and distribute the estate based on their will. However, if they do not name one, their surviving spouse automatically assumes the role. If there is still no appointed PR within 45 days after death, any creditor can apply. 

A PR must be 19 years of age or older and is not required to be a resident of Nebraska. Also, personal representatives are recommended to hire an estate planning attorney to help them with various responsibilities, ranging from filing an inventory of property to listing the items’ market value within the three-month deadline. Lawyers can also defend legal actions against the estate and assist in locating heirs.

Probate Process

In Nebraska, probate is the legal process of distributing the decedent’s assets and properties to their heirs and beneficiaries according to their will. Interested parties, including children, spouses, creditors, and entities mentioned in the will, can file formal or informal probate by submitting a demand for notice to the county court. This can be done at least 120 hours after the decedent’s death. These parties are also required to file the original will, the registrar’s statement, letters from the personal representative, and an acceptance of appointment notice.

The probate process can usually be completed within one year, while those requiring a federal estate tax return can last for 18 months. However, the stated period can be prolonged for cases involving complicated discoveries and settlements of financial affairs.   

On the other hand, rightful individuals can receive their inheritance without going to probate, provided:

  • The estate’s fair market value is $100,000 or less, excluding the deceased’s debts.

  • There is no appointment, application, or petition for a personal representative.

  • It has been 30 days or more since the decedent’s death.

  • The ownership of real property does not require transfer.

In addition, various personal assets, such as revocable trusts, transfer-on-death accounts, and joint properties, are probate-proof.

Contesting a Will

In Nebraska, interested parties have the right to object to the will’s content by contesting it. They may argue that the will does not reflect the actual intent of the testator or that it is not legally valid. They may also establish the following grounds to contest the will:

  • The testator was not in the right mind while drafting the will.

  • The will given to the testator was wrong, or there was an extra page added to it.

  • The will wasn’t signed properly.

  • The testator added someone who is not an immediate family member or someone who is not blood-related to the will. 

To contest a will, an individual must file for probate and submit their objection in writing, which must contain the legal grounds. When challenging a will that is not self-proving, the testimony of at least one witness is required. It is not required in a self-proving will. On the other hand, if the interested party wants to establish intestacy — meaning the testator died without a will — they are mandated to present proof of venue, death, and heirship to file for probate. 

The Nebraska County Court has jurisdiction in the process of contesting a will, which includes scheduling a hearing and deciding if a personal representative must be reimbursed for attorney fees. However, petitioners can transfer the case to the district court.

What Happens if Someone Dies Without a Will in Nebraska?

Nebraska’s intestacy laws govern the cases of those who died without a will. Under these laws, the decedent’s assets, properties, and personal belongings are distributed among their surviving family members with scope and limitation. However, if the decedent has one surviving heir, like a parent, spouse, child, or sibling, that individual will solely inherit all their property. 

There are assets exempt from the intestate succession rule that will be transferred based on the agreement. These include transferred-on-death assets like living trusts, retirement accounts, and life insurance proceeds. The jointly owned property will automatically pass on to the surviving co-owner. However, if no designated beneficiary exists, these assets will still be subject to probate.

Involved parties, including a child who was conceived through intrauterine insemination, must live for over 120 hours or five days after the testator’s death to be a legal heir.

Spousal Rights

The surviving legal spouse of a childless decedent acquires $100,000 and one-half of the decedent’s assets, while the decedent’s surviving parents get the remaining balance. However, if there are no surviving parents, the entire estate goes to the surviving spouse. 

On the other hand, if there are children, the surviving spouse obtains $100,000 and one-half of the decedent’s assets, while the remaining balance will be divided among their surviving children. However, if one of the children is not biologically from the decedent, the surviving spouse can only receive one-half of the estate. 

An individual who is divorced, annulled, or whose marriage has been dissolved with the decedent is not considered a surviving spouse unless the dissolution process is not completed at the time of the decedent’s death.  

A putative spouse is entitled to the decedent’s estates, provided they had lived with the decedent in good faith and are unaware of their marriage's invalidity even though they participated in a wedding ceremony.    

In addition to the decedent’s estate, a surviving spouse can obtain a $20,000 homestead allowance and a family allowance for spousal maintenance or child support. They are also entitled to an exempt property of up to $12,500 above security interest.

Nebraska’s inheritance law systems observe common laws, which allow the surviving spouse to have a right to elective share with or without the will. The surviving spouse can petition for an elective share of no more than one-half of the augmented estate, which is the value left after deductions such as homestead allowance, funeral expenses, and enforceable claims, among others. However, the surviving spouse must exercise this right within nine months after the decedent’s death or within six months after probate. 

Children’s Rights

Based on intestacy laws in Nebraska, the decedent’s estates are given and divided among their surviving children within the following limitations:

Surviving family members


Rights

Exemptions and other essential details

Surviving spouse and children

Children will receive the remaining estate after the surviving spouse obtains $100,000 and one-half of the estate.

Surviving children only

Children will distribute the entire estate among themselves.

Surviving spouse with at least one legitimate child and at least one illegitimate child

One-half of the estate is equally split among the legitimate and illegitimate children. 

Legitimate children have stronger inheritance rights than those who are illegitimate.

Adoptive children

Have the same rights as the biological children of the decedent. 

Natural parents of the adoptive children do not have the right to the latter’s inheritance.

Stepchildren and foster children who are not legally adopted have no rights to inheritance.

Children born out of wedlock

Children born out of wedlock are legitimate heirs if paternity has been established before the father’s death or established post-death by convincing proof. 

Children born out of wedlock may also inherit something if their parents participated in a wedding ceremony, even if it is deemed void.

They can also inherit if the decedent did not refuse to support the child and treated them as his own.  

The Rights of Other Surviving Relatives

Under Nebraska’s intestacy system, if the decedent has no surviving spouse, children, or parents, their estate must be equally divided among their siblings. If there are no surviving siblings, the decedent’s grandparents will inherit their assets, of which one-half will be given to the maternal side and the remaining one-half to the paternal side. 

However, if there are no surviving grandparents, the decedent’s estate will be equally distributed among their aunts and uncles. And if there are still no surviving aunts and uncles, the estate will be given equally to their remaining surviving relatives, like cousins. 

Relatives who only share a half-blood relationship with the decedent share the same inheritance as those who are full-blooded family members. Meanwhile, grandchildren do not usually receive an inheritance unless their parents or the decedent’s children died before receiving the estate.   

Estates With No Heirs

If the decedent died without a will and rightful heirs, surviving family members, or named beneficiaries, all of their properties and assets would pass to the state. This is usually rare in Nebraska, as the intestacy law stipulates that the property shall be given to anyone who is even remotely related to the decedent.

Unique Situations in Nebraska Inheritance Law

In Nebraska, interested parties, like heirs, surviving spouses, and beneficiaries, who are guilty of aiding or committing murder against the decedent do not have the right to receive any inheritance, whether or not the decedent has a will. On the other hand, heirs who are non-citizens or illegal aliens can still receive their entitled estate, as immigration status does not affect their inheritance rights.

In June 2015, the Nebraska Supreme Court legalized same-sex marriage, allowing members of the LGBTQIA+ community to have the same legal rights as traditional couples. They have the same inheritance rights as a traditional surviving spouse under an intestacy rule, which means they are entitled to $100,000 and one-half of the estate should a decedent die without a will and with or without children. 

Also, the decedent with a will has a legal right to pass their property on to someone he or she is in a domestic partnership or serious romantic relationship with, even if the state does not recognize that individual as the deceased’s spouse. 

Does Nebraska Impose Inheritance and Estate Taxes?

Nebraska imposes an inheritance tax, which is the liability of someone who will inherit the property. The following are subject to inheritance tax:

  • Real property owned by someone living in another state.

  • Property interests.

  • Those that were transferred or given away for less than market value within three years of the decedent’s death.

The table below illustrates how much the imposed inheritance tax is on the remaining surviving family members:

Surviving family members

Inheritance tax costs 

Exemptions

Immediate relatives

(including children, siblings, parents, and grandparents) 

The first $100,000 of the inheritance is tax-free. Anything above $100,000 is subject to a 1% inheritance tax.

Anyone under 22 years old is free of inheritance tax. 

Remote relatives

(including aunts, uncles, nieces, nephews, and their spouses)

The first $40,000 of the inheritance is tax-free. Anything above this is subject to an 11% inheritance tax.

Anyone under 22 years old is free of inheritance tax. 

Other types of beneficiaries

The first $25,000 of the inheritance is tax-free. Anything above this is subject to a 15% inheritance tax. 

However, the following assets are exempt from inheritance tax:

  • Properties that were transferred to the surviving spouse.

  • Those with scientific and educational purposes.

  • Gifts that fall under the federal gift tax annual exclusion.

  • Employee benefit plans.

  • Life insurance death benefits that are not paid to an executor. 

Also, the following expenses are deducted from the inheritance tax:

  • Funeral costs.

  • Administration fees.

  • Expenses for the last illness within six months of death.

Surviving family members are required to pay for a federal estate tax return if the estate value exceeds a gross asset and prior taxable gift value of $12.92 million for a single person and $24.12 million for couples. 

Legal Resources Related to Inheritance Law in Nebraska

The Milton R. Abrahams Legal Clinic

The civil practice clinic at Creighton University School of Law provides free legal assistance for low-income individuals and families in Douglas County. It handles wills, probate, and guardianship matters. Interested parties can call 402-280-3068 for intake screening between 8:30 a.m. and 4 p.m. Monday to Friday.

Volunteer Lawyer Project

Launched by the Nebraska State Bar Association, the Volunteer Lawyer Project has been helping financially challenged individuals connect with pro bono attorneys since 1983. The program’s volunteers offer legal representation to those facing issues involving wills, bankruptcy, powers of attorney, and consumer debt.

Rural Estate Planning Clinic Program

The Rural Estate Planning Clinic Program of the University of Nebraska-Lincoln provides free basic estate planning solutions to senior adults. It drafts, prepares, and executes estate planning documents, like a durable power of attorney, a transfer on death deed, and a simple will, for seniors. For more details, contact the Admission Office at 402-472-8333.

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