What is an inheritance?
An inheritance refers to assets that are passed down to others after someone dies.
It includes cash, investments, and real estate, as well as other valuables such as jewelry, cars, furniture, art, etc.
Usually, inheritance is given to family members and close friends.
The person whose assets are being passed down is called the decedent, and the person receiving it is called the beneficiary.
Beneficiaries may have to pay tax on the inheritance.
How is the inheritance distributed?
If the decedent has a will, or a last will and testament, (a legal document that describes how you would like your property and other assets to be distributed after your death), then the assets are distributed among the beneficiaries based on the will through a probate court.
If the decedent doesn’t have a will, then the probate court distributes the assets based on state laws using an administrator.
The assets are used to pay off any outstanding debt of the decedent before they are distributed to the beneficiaries.