When a person dies, the inheritance laws of their state of residence dictate how and to whom the assets in the estate will pass. As is true in most states, inheritance laws in Kentucky depend on whether the deceased person left a valid will. If so, the person is said to have died testate; if not, they died intestate. This is the critical issue in determining who inherits estate assets in Kentucky.
Dying Testate or Intestate
Although many people find it difficult to turn their thoughts to making a will, dying testate does have a number of advantages over dying without one, or intestate. Most important is the right to choose beneficiaries who will receive estate assets. That is, when someone dies with a valid will, their assets are distributed to the persons or organizations named as beneficiaries in their will.
When a person dies without a valid will, the laws of the state of residence control who will inherit the person's property. These laws, called intestate succession laws, differ from state to state, although most give preference to a surviving spouse and children.
Since inheritance laws differ, the laws of the state of residence of the deceased determine the outcome. If that state is Kentucky, it is important to understand both Kentucky laws about making a will, the probate procedure, and the state's intestate succession laws.
Benefits of a Kentucky Will
A valid Kentucky will allows an individual to accomplish a variety of matters. The primary things a will can accomplish are:
- Allowing an individual to name the people or organizations they wish to inherit their assets.
- Naming a trusted individual to serve as the personal guardian of minor children.
- Naming a trusted individual to manage property and assets that are bequeathed to minor children.
- Selecting an executor who is in charge of the probate of the will. The executor defends the will against contests and works to ensure that the terms of the will are carried out.
Making a Will in Kentucky
A will is a written document signed by an individual that sets out the persons or organizations that the individual has selected to inherit their estate property at their death. But simply creating such a document does not guarantee that the court will accept the will as a legal document. In order to be valid, a will must comply with state requirements.
In Kentucky, the laws about making a valid will are fairly straightforward. Anyone of sound mind who is at least 18 years old is eligible to make a will in this state. A minor cannot write a will to specify beneficiaries, but if a Kentucky minor has a child, they can create a will to name a guardian for that child if they die.
Rules for Making a Valid Last Will and Testament
The general rules for wills in Kentucky are:
- Written on paper. Current Kentucky law requires that a will be written out or printed on actual paper. While electronic wills are currently permitted in some states, Kentucky laws do not yet recognize such wills.
- Witnesses. Generally, a valid Kentucky will must be signed by the person making it in front of two witnesses. After that, the witnesses must then sign the will in front of each other and in front of the person making the will.
- Holographic wills. These are wills written and dated in the handwriting of the individual making the will. They need not be witnessed, yet many experts recommend against using them as they are easier to challenge than witnessed wills.
Interested Witnesses Under State Law
An interested witness is someone who is also named as a beneficiary in the will. In some states, the will witnesses must be disinterested parties. This is not the rule in Kentucky, and an interested witness does not void the will. However, some limitations do apply.
For example, if a will includes a gift to an interested witness, that gift is void. On the other hand, if the interested witness is also a legal heir under Kentucky's intestate statute, such as a close family member, the interested witness may take the gift that is equal to, or less than, the value of their intestate share of the estate would have been if the individual had died without a will.
Making a Self-proving Will
Some states mandate that a will, in order to be valid, must be signed in front of a notary. Kentucky laws do not require this, and it is not necessary to notarize a will to make it legal.
On the other hand, signing a will in front of a notary is not a bad idea. In Kentucky, when an individual signs a will before a notary, it becomes "self-proving." This means that the court will accept the authenticity of a will without contacting or getting testimony from the witnesses who signed the will. In the case of a will challenge, this can speed up the probate process significantly.
In order to make a will self-proving, both the individual making the will and their two witnesses must appear before a notary. Each must sign an affidavit establishing their identity as well as the fact that each party knows that the document being signed is a Kentucky will.
Dying Intestate in Kentucky
If a person dies without a valid will in Kentucky, the property and assets in the estate pass to close family members as listed in the Kentucky intestate succession statute. It doesn't matter that the deceased had, during their lifetime, expressed different intentions for passing the property. Potential beneficiaries cannot contest the intestate distribution.
If the deceased person did not leave a valid will, the assets that remain in the will after debts are paid pass to a surviving spouse and/or surviving decedents. These are some of the basic rules that apply:
- Dower and curtesy. In Kentucky, if a deceased does not leave a will, their spouse will inherit one-half of the intestate property under a law called "dower and curtesy." If there are no surviving descendants, parents or siblings of the deceased, the spouse inherits everything.
- Remaining property if descendants: The other half of the intestate property passes to the descendants of the deceased. This includes legitimate children, illegitimate children if paternity is established, posthumous children, and adopted children but not foster children. Grandchildren only get a share if their parent who is a child of the deceased is not alive when the deceased dies.
- Remaining property if no descendants: The other half of the intestate property is divided between the spouse and the surviving parents of the deceased. If there are no surviving parents, it is divided between the spouse and the surviving siblings of the deceased.
- No surviving spouse: If there is no surviving spouse, the entire estate passes to descendants. If no surviving spouse or descendants, it all passes to the deceased's surviving parents or, if none, to surviving siblings.
What if a person dies without any surviving relatives who would inherit under the Kentucky intestate succession statutes? The state of Kentucky takes the decedent's estate. This is called "escheat" and it also happens with abandoned bank accounts and other assets outside of probate.
Interesting Kentucky Intestacy Laws
Kentucky has some details in its intestate statutes that bear mention, some because they are unique and others because they often come into play. First, there is no penalty in Kentucky for being a half-relative of the deceased. For example, if the deceased has a half brother with whom they share a father but not a mother, that brother is treated the same as a full brother for intestate purposes.
Second, if a parent or grandparent made a gift of money to one child or grandchild, this will be treated as an advance when that parent or grandparent dies intestate. The child or grandchild will still be entitled to an intestate share, but the value of the gift is deducted from their share. The child or grandchild will not be entitled to take anything more from the deceased's estate until the other relatives have received an amount equal to this person's share.
Third, if the deceased was gifted real property by their parents, who survive them, and the deceased doesn't leave any descendants, the real property is returned to the parents.
Fourth, what if the deceased has a relative who is in line to inherit but is born after the death? For example, what if the brother of the deceased died before the deceased, but his wife was pregnant at the time of his death and gave birth after the deceased's death? Just like Kentucky permits posthumous children to inherit from a parent, it also allows posthumous relatives to inherit to the same extent they would have had they been born before the deceased died.
Kentucky Probate Process
Whether or not there is a will in Kentucky, the estate may go to probate. Probate is the legal process of settling the estate of a deceased person. It involves collecting the assets of the decedent, paying their debts and distributing the remaining assets. In fact, the personal representative or executor must, within 60 days of being appointed by the court, file an inventory in court listing the assets and their value at the time of death.
If there is a will, the assets are distributed to the named beneficiaries. If there is no will, it is distributed according to the intestate succession rules. The estate cannot close probate until at least six months from the date the personal representative or executor was appointed. But sometimes probate takes far longer, especially if there is a will contest.
In Kentucky, there are simplified probate rules for small estate and both informal and formal probates for larger estates. Note that the executor is entitled to payment from estate assets. They receive up to 5 percent of the value of the estate, plus 5 percent of the income that the estate earns during the executor's management.
Note that assets in a living trust, assets jointly owned with survivorship rights, life insurance benefits, and assets that are assigned under "pay-on-death" designations, like bank accounts, are not included in the probate estate. These are termed non-probate assets. They can be a large portion of the decedent's assets, especially if real estate is involved.
Kentucky Estate and Inheritance Tax
Kentucky does not impose an estate tax. However, the Kentucky Department of Revenue levies taxes on bequests received by beneficiaries. The amount depends on the amount of money the beneficiary received and the relationship between the beneficiary and the deceased person.
Some relatives' bequests are exempt from paying inheritance taxes. These persons, called Class A beneficiaries, include the surviving spouse, surviving parent or parent, or surviving descendants. More distant relatives pay inheritance tax only on bequests of over $1,000, with a rate of between 4 percent and 16 percent.
All other beneficiaries are called Class C beneficiaries. They must pay Kentucky inheritance tax if the values of their bequests exceed $500.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.