Laughing Heir

AAA

DEFINITION of 'Laughing Heir'

A distant relative who has inheritance rights despite not having a close, personal relationship with the decedent. In most jurisdictions, the law requires that the property of a person who passed away without leaving a will be given first to members of the decedent's immediate family, such as a spouse, children, etc. Under common law, this familial hierarchy extends as far back as it can be traced, giving folks who may have never even heard of the decedent - much less known him/her - inheritance rights.

INVESTOPEDIA EXPLAINS 'Laughing Heir'

Many states have enacted laughing heir statutes that limit the rights of distant family members of decedents who died without a will. In these states, the decedent's estate passes, or escheats, to the state itself, to be disbursed as government officials see fit. In states without laughing heir statutes, distant relatives still have priority over the state to an intestate decedent's belongings.

Therefore, it is important to know whether the state of your residence has any laughing heir statutes when considering the execution of your will, lest you inadvertently leave your benefactors liable to potential lawsuits from distant relatives.

RELATED TERMS
  1. Custodial Agreement

    An arrangement whereby one holds an asset or property on behalf ...
  2. Bona Vacantia

    A legal term for the situation in which property is left without ...
  3. Next Of Kin

    A person's closest living blood relative. The next-of-kin relationship ...
  4. Primary Beneficiary

    A beneficiary in a will, trust or insurance policy that is first ...
  5. Escheat

    The transfer of title of property or an estate to the state when ...
  6. Estate

    All of the valuable things an individual owns, such as real estate, ...
Related Articles
  1. Professionals

    Tips for Spreading the Wealth to Relatives

    There are many ways that your clients can move money or other assets to relatives in order to reduce their tax bills. Here's a primer on best practices.
  2. Professionals

    Tips for Handling Client Inheritance

    When clients leave or receive an inheritance, be prepared to deal with much more than mere paperwork or financial transactions.
  3. Professionals

    Advice on Dealing with Unequal Inheritances

    When it comes to inheritances, the concept of equal versus equitable can be hard to navigate, even when all parties are reasonable.
  4. Professionals

    Top Tips for Family Wealth Transfers

    Essential tips for tackling family wealth transfers.
  5. Professionals

    Estate Planning Tips for Financial Advisors

    Estate planning is not a set-it-and-forget-it proposition. Here are some tips for you and your clients.
  6. Personal Finance

    What's an Irrevocable Trust?

    In an irrevocable trust, the grantor gives up the right to revise, amend or terminate the trust without the permission of the beneficiary. An irrevocable trust is best used as an estate-planning ...
  7. Investing Basics

    How Advisors Can Protect Inherited IRAs

    A new Supreme Court ruling has some financial advisors rushing to set up trusts to help protect inherited IRAs. Is that necessary?
  8. Personal Finance

    Top 10 Money Mistakes New Parents Make

    Although having a child is an exciting and exhilarating experience, it is very easy to lose track of finance or make unwise decisions with money.
  9. Retirement

    Should You Convert Your IRA?

    Discover the factors you must weigh to make this decision.
  10. Home & Auto

    Why Your Will Should Name Designated Beneficiaries

    Find out how to make the tough decisions when it comes to choosing who will receive your assets and how they will be paid out.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center