Laughing Heir

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.

BREAKING DOWN '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. Decedent

    A person who is no longer living. Just as a taxpayer's possessions ...
  2. Income In Respect Of A Decedent ...

    Money that was due to a decedent and will pass through to the ...
  3. Decedent (IRD) Deduction

    The decedent or IRD deduction stands for Income in Respect of ...
  4. Next Of Kin

    A person's closest living blood relative. The next-of-kin relationship ...
  5. Form 706: United States Estate ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  6. Heir

    HeirA person who inherits some or all of the estate of another ...
Related Articles
  1. Managing Wealth

    Avoid These 4 Common Causes of Family Estate Fights

    Sibling battles over their parents' belongings are quite common. But open family discussions before the parent dies can often prevent them.
  2. Managing Wealth

    Before You Agree to Be an Executor: Know This

    How to avoid 5 surprising hazards of being the executor of an estate.
  3. Financial Advisor

    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. Retirement

    6 Ways To Lose Your Estate

    Find out why you shouldn't put off putting your affairs in order.
  5. Managing Wealth

    Why It's So Important to Update Your Estate Plan

    As rules and exemptions tied to the estate tax change, so should your estate plan. Here's why updating it is so important.
  6. Financial Advisor

    Tips for Retaining Your Client's Heirs

    It's a good idea to start working with your clients' children early on to forge relationships and hopefully continue to manage that wealth.
  7. Personal Finance

    Check for Lost Property Now – Before a State Grabs It

    You may be richer than you think. There are billions in unclaimed funds in the U.S. Here's how to determine whether some of that money is yours.
  8. Financial Advisor

    How Advisors Can Assist Clients with Inheritances

    Leaving an inheritance can be complicated and even a burden on the recipient. Here's how advisors can help.
  9. Managing Wealth

    How to Avoid Family Inheritance Disputes

    A death of a loved one is difficult. It is important to avoid family disputes over the inheritance, the best we can, and here are the best ways to do that.
  10. Financial Advisor

    Do Big Inheritances Do More Harm Than Good?

    Most wealthy parents plan to pass on their wealth, but few have had discussions with their heirs. Financial advisors should broach the issue with clients.
RELATED FAQS
  1. How does the IRS want me to report the RMDs I receive from a small non-spousal inherited ...

    Aside from my own 1040, do I need to file tax returns for the stretch IRA in the name of the decedent's trust for my ... Read Answer >>
  2. How is cost basis calculated on an inherited asset?

    Understand how the cost basis for stocks, property and other inherited assets is calculated, and the resulting tax implications ... Read Answer >>
  3. What debts don't have a statute of limitations applied to them?

    Learn what it means to have a statute of limitations applied to a debt, and find out which debts typically do not have a ... Read Answer >>
  4. Are estate distributions taxable?

    Discover how estates are taxed, why estate distributions are generally tax-free, and circumstances that may require an heir ... Read Answer >>
  5. How can a partial redemption be withdrawn after somebody’s death?

    My husband passed away on the 23rd of March, and o... Read Answer >>
  6. What happens if property is wrongfully escheated?

    Find out what happens if your financial assets, such as checking and savings accounts or investment portfolios, are wrongfully ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center