What is 'Laughing Heir'

A laughing heir is a distant relative who has inheritance rights even though they may not have a close, personal relationship with the deceased person whose estate is being settled.

BREAKING DOWN 'Laughing Heir'

A laughing heir may not be aware he is entitled tot an inheritance until he is notified by an attorney or court representative.

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 or children. Under common law, this process of investigating the familial hierarchy can extend as far back as it can be traced, until legitimate legal heirs can be located. In some cases, people may be identified as heirs even though they have never even heard of the decedent, and had no relationship or interaction with them whatsoever. The news that they may inherit a portion of a distant relative’s estate usually comes as a surprise to the laughing heir.

This notion of being contacted out of the blue and being told you are the long-lost heir of some distant relative and have claim to their estate is probably something many people have dreamed about, although it will never actually happen to most people.

Laughing Heirs and Estate Planning

Folklore claims that laughing heirs are so named because they are do distantly related and removed from a close connection to the deceased that they feel no necessity to grieve or mourn. Instead, they can simply collect their windfall and “laugh all the way to the bank.”

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.

And of course it is always important, for many reasons, to have a detailed and legally executed will that specifically outlines exactly what your wishes are, particularly involving what you want to happen to your property and other belongings of value. It is a good idea to enlist the help of an experienced estate planning attorney, who can advise you on many important aspects of creating your will and making arrangements for your estate.

RELATED TERMS
  1. Inheritance

    An inheritance is all or part of a person's estate/assets that ...
  2. Intestate

    Intestate refers to dying without a legal will. When a person ...
  3. Taxable Estate

    Taxable estate is the portion of a deceased person's net assets ...
  4. Escheat

    Escheat is the flow of estate assets to the state when a person ...
  5. Terminal Year

    Terminal year is the year in which an individual dies, in the ...
  6. Inheritance Tax

    Inheritance tax is a tax imposed on those who inherit the estate ...
Related Articles
  1. Financial Advisor

    How "Death Tax" Waivers Work

    Although the specific rules vary by state, an estate or inheritance waiver relinquishes an heir from the right to receive assets distributed from a decedent.
  2. Retirement

    4 Reasons Estate Planning Is So Important

    Estate planning isn't fun, but without it, the consequences can be devastating for your heirs – or at least, not what you intended.
  3. Financial Advisor

    How Estate Taxes Work, A Real Life Example

    The estate tax is frequently misunderstood. Learn more details about exactly how estate, or inheritance, taxes work in the United States.
  4. Retirement

    Share Your Estate Plan With Your Adult Children

    Talking about estate planning is never an easy conversation, but it's better to do it now than to have your kids deal with the consequences later.
  5. Managing Wealth

    Your Estate: The Best Assets to Leave to Family

    When it comes to estate planning, there are three main factors to consider when distributing assets: liquidity, sentiment and tax planning.
  6. Retirement

    Estate Planning: A To-Do List to Get You Started

    Regardless of the size of your estate, having an estate plan will help you and your family.
  7. Financial Advisor

    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.
  8. Managing Wealth

    How Executives Should Approach Estate Planning

    Estate planning can be more complex for executives who have substantial assets.
  9. Financial Advisor

    Top Estate Planning Tips for 401(k)s and IRAs

    Here's how to avoid estate planning pitfalls when it comes to leaving IRA and 401(k) assets to heirs.
Trading Center