Some people would call it luck, while others would just say that it’s being born into the right family. Average Americans who have a keen ear for pop culture are becoming more and more interested in the lives of famous heirs who are waiting their turn to inherit more money than we could ever imagine spending. Here are some of today’s leading heirsand heiresses staking their claims on their relatives’ fortunes.

In an ideal world, we would like to hope that our belongings would be passed on to our family and friends in a way that we were comfortable with. While you may have your own ideas regarding who should receive what when you pass on, the unfortunate reality is that in many cases, passing your belongings on to your loved ones is not a simple, two-step process.

Even if you have undergone extensive probate planning, and you have a will, or maybe even a living trust in place- certain procedures must take place before your family will receive what you have left to them.

Payment of debts and taxes

Your estate, which is a compilation of all of your physical belongings and certain assets, has a fixed monetary value. When you pass on, before your belongings can be given to the heirs of your estate, certain taxes, as well as any outstanding debts, must be taking care of. Now, if your estate has enough liquid capital to take care of the debts and estate taxes — your estate may not need to be liquidated. However, if there is not enough money available to pay off your accounts or taxes, there is a good chance that at least a portion of your estate will need to be sold off in order to take care of these obligations.

Regardless of whether your belongings are distributed through the probate process, or whether a Trust oversees the distribution of your estate; before your beneficiaries can lay claim to the property, or belongings, that you have left to them — these outstanding debts must be satisfied.

Distribution to your family and loved ones

Once your estate’s financial obligations have been taken care of, your belongings are distributed to those who you have specifically left them to. The executor, or sometimes called an administrator, executes your final wishes regarding the distribution of your belongings. If your estate was liquidated to take care of your financial obligations, it is the executor’s job to try to distribute the remnants of your estate to your beneficiaries in a way that is as fair as possible while still respecting your final wishes.

If you do not have a will

If you do not have a will in place, this can complicate the distribution of your belongings to your loved ones. In these cases, the court system will ultimately decide who holds inheritance rights in regards to your belongings, and that will depend on the laws of your state. Leaving the final say of who receives what in the hands of the court system is not something that many people intend or want, but without a will, this is how the process works.

While the saying, “you can’t take it with you” is certainly true — this does not mean that you cannot leave your belongings to the loved ones of your choosing. For this reason, the importance of writing, and maintaining, a will cannot be understated. No, you cannot take your belongings with you, but you can definitely leave them in the hands of somebody who can use them.

Just as you are required to pay taxes in life, your property and belongings are subject to taxation even after you pass on. Moreover, in some cases, your beneficiaries must pay taxes on your belongings that you leave to them according to probate law.

Here are a few things that you should know about inheritance taxes, and even a few tips that may allow you to minimize the amount of tax that your beneficiaries must pay.

Inheritance taxes vs. estate taxes

Some people confuse inheritance taxes and estate taxes, and while they both, in fact, tax your estate, the differences between the two largely lie in who is responsible for paying these taxes. Estate taxes are determined by the overall value of your estate, and they are paid from your estate to the government — state, federal, or both.

In contrast to estate taxes, beneficiaries are responsible to pay inheritance taxes after they have received a portion of your estate. For example, if you intend to leave a valuable item to your best friend after you pass on, your friend may be required to pay taxes on the value of the inheritance that you have left for them. It is unfortunate, but in some cases, your beneficiaries may actually need to sell their inheritance or get an inheritance loan in order to pay the inheritance tax.

Inheritance tax rates and your relationship to heirs

In many states, your relationship to your beneficiaries determines, at least in part, their inheritance tax rate. If you leave property to your children, for instance, it is taxed differently than if you leave property to a friend of yours.

Typically, if you leave part of your estate to your parents or your children, this transfer of property will result in a lower inheritance tax rate than if you leave property for a brother, sister, aunt, uncle, or a friend. Likewise, if you leave a vacation home to one of your best friends, your friend will pay a higher inheritance tax rate than your brother would pay if you left the vacation home to him.

You may be able to bypass the inheritance tax system

Many people feel that inheritance taxes place an unfair burden upon beneficiaries, especially when they are dealing with the loss of a loved one. Moreover, some people feel that the government is essentially “double dipping” by taking taxes not only out of the estate, but also out of portions of the estate that are distributed to the beneficiaries.

Here are a few situations where you may be able to bypass the need for your beneficiaries to pay inheritance taxes, or at least to lower the amount that they must pay:

1. Require your estate to pay inheritance taxes - If you specify in your will that you want your estate probate to handle all of the inheritance taxes, you may be able to alleviate this burden from your beneficiaries.

2. Pass your entire estate on to your surviving spouse - In many states, when an estate passes to a surviving spouse, not only is the surviving spouse exempt from paying inheritance taxes, they are also exempt from paying estate taxes.

3. Minimize the value of your inheritance -Inheritance taxes are determined based on the value of the property that you are transferring to your beneficiary. In some states, non-spousal beneficiaries may be able to bypass the need to pay inheritance taxes if the value of the property that you are transferring falls below the state’s minimum tax requirements.

Final word on inheritance taxes

In a perfect world, your loved ones would not be taxed on gifts given to them after you pass on. However, the world is far from perfect. Nevertheless, by knowing how the inheritance tax system works, you will be in a better position to help alleviate some of the additional financial burdens placed upon your loved ones at an already difficult time in their lives.

Hard financial times can strike us all on occasion. Whether we are facing personal hardships, a local downturn in the economy, or even a worldwide recession –the effects can be felt in our own lives and can put a strain on our personal finances. If you are facing your own economic crisis and are on the verge of receiving an inheritance, here are a few things that you can do that will allow you to use your inheritance to your advantage.

Remember Inheritance Taxes

Something to keep in mind is that when you initially receive your inheritance, you may be required to pay taxes on the value of what you receive. Now, depending on which state you live in, your relationship to the decedent, or which deductions you can claim, your inheritance tax rate can vary from nothing to a significant percentage of the value of your inheritance.

If your state requires inheritance taxes to be paid, you generally have a pre-determined number of months to pay those taxes. Unfortunately, in cases where your inheritance consists of real property or personal property, you may actually need to sell off a portion of your inheritance just to satisfy the inheritance tax. For this reason, if you are set to receive an inheritance, it is highly recommended that you find out whether you are required to pay an inheritance tax, as well as your other inheritance rights.

Use Your Inheritance to Pay Off Debt

For some people, an inheritance can give them a way to start taking care of some outstanding debts, albeit a positive opportunity that has come about through negative situation. Now, sometimes individuals look at receiving a large inheritance, especially when it is cash, as a way to pay off major debts alone, instead of a way to help them get through their current financial hardships while paying off debt at the same time.

If you are in the middle of your own economic crisis, while commendable, it is probably not in your best interest to take the whole of your inheritance and apply it to a one-time debt. Instead, consider consolidating your debts and working out payment arrangements with creditors. This way, you can use your inheritance not only to take care of your outstanding debts, but also to provide stability for you in case you experience any fluctuations in your take-home pay.

Multiply Your Inheritance - Use It as an Investment

One of the best ways to use your inheritance, even amidst an economic crisis, is to use it as an investment tool. While there are a number of different ways to go about this, the result would be the same — multiplying the value of your inheritance.

For instance, let’s say that the current economic crisis has caused the prices of homes to go south considerably. If your inheritance consists of a large amount of cash, it may be worthwhile to consider purchasing property while the prices are very low. Now, obviously, you should do your research, but if you receive a large sum of cash, with house prices at an all-time low, and especially if analysts say that there will be an uptick in housing prices in the near future — this could be a very sound investment.

Another example of investing your inheritance could be if you receive an antique vehicle, piece of farm machinery, or even an old painting. If you have the means available, and it would increase the value of what you have received, restoring something and then selling it may very well help you to multiply your inheritance.

These are just two ideas that you could use, though they may not be applicable to your situation. Nevertheless, the point remains that if you are facing an economic hard time, you can try to use your inheritance money so that it brings you more money than you receive from the inheritance alone.

Using Your Inheritance to Your Advantage in an Economic Crisis

It is inevitable that at one time or another, we all will be faced with some sort of financial hardship. What is more, though, is that many of us will receive an inheritance or two throughout our lifetimes. While it is true that receiving an inheritance is a sad time due to the recent loss of loved one, it does not mean that we cannot, or that we should not, use the inheritance to help us out in our current situation.

In fact, the exact opposite is true — our loved ones give us an inheritance so that we can use it and benefit from it. By being smart with your inheritance, not only will you be able to take care of past due bills, but you also may be able to steady yourself through an economic hard time, or even multiply the value of your inheritance several times over.

Nobody likes to think about their own death, but to ignore the inevitable is to put the financial future of your family at risk.   Proper probate planning of your estate before you die can be the difference between providing for your family after you are gone, or leaving them with financial and emotional stress as a result of disorganized finances and an improper distribution of wealth.

Remember, you are never too young or too old to create a good estate plan – especially if you have children.  The steps below benefit every adult from the 20’s on through to their 90’s.

• Think about the big picture.  Take a few hours to sit down and think about your family and their individual financial situations.   Consider your spouse, your children and their children and how your passing might affect them financially, and what their needs will be in the coming years.  This will help you develop a “big picture” game plan for your estate planning.
• Talk to your accountant. If you have a family or business accountant, this is a good time to go through all your finances with them and make sure everything is in order.  By discussing these matters with a professional you will help ease the potential tax burden or debt on your heirs.
• Create a will and/or trust. Next, it is time to contact an estate planning attorney who can help you prepare a will or trust.  An estate planning attorney will be able to assist you with everything from the fair and equitable distribution of your assets, right on through to the writing and execution of your will.
• Consider important potential medical decisions.  Although we try not to think about it, there may be decisions required of those closest to you if you become incapacitated due to illness or injury.  Think long and hard about how you would like these situations handled, and who should make the decisions if you cannot.  Then, communicate this information to your estate planning attorney so that the direction can be incorporated in your will.
• Choose a representative.  One of the most important, yet often overlooked aspects of estate planning is the selection of a personal representative for the estate.  This is an absolutely crucial decision, as the representative (known as the executor) will be responsible for overseeing the distribution of funds and working with an attorney to resolve any disputes should they occur during the probate period.
• Create a detailed inventory of your holdings and property.  If there are items in your will that you are earmarking to be distributed to family and friends, the burden will fall on the representative to find them and get them in the right hands.  Make the representative’s job easier by creating a comprehensive inventory of your possessions and where they can be found.  In particular, make sure to reference the location of all your tax records and financial papers.  Note how you’d like any inheritance money to be distributed as well.  If there is a particular accountant you would like to work with you representative, name that individual as well.

Learning the ins and outs of wills and trusts can be very confusing.  Here are some useful tips to help you better understand some of the common types of wills and trusts, as wells as how they are carried out through the probate process.

1. What is the difference between a will and a trust?

Both provide a guide for the distribution of one’s assets once a person has died. The major difference is that assets left behind in a will must go through a process called “probate”, in which the government ensures the validity of the will and ensures that all taxes and legal fees are paid. This process can take up to a year. Assets left behind in a trust don’t go through the probate process, allowing one’s assets to be distributed more quickly and privately. The downsides to trusts, however, are that they take longer to draft, require more maintenance, and are more difficult to make changes to than wills.

2. Common types of wills:

• “Noncupative” or “Oral” will- a will that is made orally to another person and is not recognized by many states.
• “Holographic” will- a hand-written will by the testator.
• “Living” will- generally a written document that outlines the medical care and other wishes of a person who is terminally ill or in a vegetative state.

3. Common types of trusts:

• “Inter-vivos” or “Living” trust- created during settlor’s lifetime.
• “Testamentary” trust- trust created upon the death of an individual.
• “Revocable” trust- can be changed or revoked at any point during the settlor’s lifetime.
• “Irrevocable” trust- cannot be changed or revoked at any time.

4. Who ensures that a will or trust is carried out?

To ensure that the wishes of the testator/ settlor are carried out, an executor chosen by the deceased will oversee the distribution of assets. In many cases, an executor is someone close to the deceased (spouse, child, sibling, etc.). With extremely large or complicated estates, the executor may be an attorney.

5. How will the assets of a will or trust be taxed?

This depends mainly on your state’s laws. Many states allow monetary gifts up to a certain amount to be untaxed. Finding out the specific tax laws in your state and how the apply to your will or trust is always a good idea before drafting the document.

6. Addressing creditors’ claims to assets in a will or trust.

Upon one’s death, there may be unpaid debts to various creditors. Sometimes, creditors will come after the assets left behind to beneficiaries. The laws regarding creditors’ rights to assets left behind in wills and trusts vary from state to state. Understanding what rights a beneficiary has versus the rights of creditors is always a good idea when becoming involved with a will or trust.

Because every family is different, every will, trust or other estate planning document must be unique in order to meet the family’s specific needs. The following are several important will and trust clauses that every individual should know before assigning their assets in an estate planning document and entering the probate process.

Exordium Clause

This basic, introductory clause states that the will in question is the most recent will crafted by the individual and that it should serve to revoke all other wills that may have come before it.

Fiduciary Appointment and Powers Clauses

These are the clauses in a will or trust that name the person who be in charge of distributing the finances of the estate, and lays out in detail what powers this individual will have. The fiduciary duty clauses are crucial because they leave no doubt as to who is responsible for making sure that those named in the estate will get their money or property as intended.

No Contest Clause

Some people can see trouble coming from a mile away – and they recognize when their family is going to experience conflict over their estate after they pass away. For these individuals with foresight, there is the no contest clause – which simply states that any individual who is named in a will or trust, and contests their inheritance in any way, will not get their money.

Generation Skipping Clauses

Sometimes, kids can be a handful. And when they get older without developing any financial skills, it can be a trick situation, especially for individuals who want to get money to their grandchildren, but don’t want their own kids to blow it all. Using generation-skipping clauses can not only help get the money in the right hands, but also provides a wealth of tax-saving benefits.

Tax Apportionment Clause

Guess who gets the most money out of your estate? If you said Uncle Sam, you’d be correct. The problem with estate planning related taxes is that the government tends to burden everyone who is getting a distribution equally, regardless of how much money they are receiving. In order to distribute the money more fairly, use a tax apportionment clause. These clauses allow you to determine how everyone mentioned in your will is going to be impacted by the tax code.

Spendthrift Clause

Often, a child stands to inherit a considerable sum of money from his or her parent. But what if this individual is unable to control their spending? In this case, the parent might want to consider a spendthrift clause. Spendthrift clauses give a trustee control over any inheritance money so that the child will not use the funds unwisely. Spendthrift clauses also protect inheritance funds from the creditors of those named in the will or trust.

Common Disaster Clause

The common disaster clause directs the executor of a will or trust on how to manage the estate in the event that husband and wife die simultaneously in an unexpected accident. These are important clauses used specifically in the event of a car accident, plane crash or other unforeseen disasters.

While much is commonly known about how to set up your wills and trusts in order to provide for your children after you have passed away, setting up the proper accounts and trusts to leave money to your grandchildren is a more complex affair. The following information will help you engage in good financial planning and will protect your grandchildren’s inheritance rights – and are especially useful if you are concerned that your own children will spend the money in ways that you did not intend, and that do not benefit the next generation of your family.

Tips for Leaving Money to Your Grandchildren:

1. Create a custodial account. A custodial account holds the money that you earmark for your grandchildren until they reach a certain age. With a custodial account, your grandchildren will have access to their inheritance when they reach the age of 18. These types of distributions are handled under the Uniform Transfers to Minors Act (UTMA) and are easy to create with the help of an estate planning attorney.

2. Create a minor’s trust. A minor’s trust allows the trust to control your money even after the grandchildren are older than 18. With a minor’s trust, you control when the individual receives their inheritance, regardless of age. In addition, an attorney can help draft a trust that distributes certain amounts of the inheritance at certain times (at the age of 20, 30, etc.), and even for certain reasons (such as college, a wedding, etc.)

3. Buy savings Bonds. At any time during your life, you may purchase United States Savings Bonds in the name of your grandchildren. These popular bonds are purchased for approximately half of their face value and no taxes need to be paid on them until the bonds are cashed in. The bonds should be placed in the name of the grandchild so that nobody else can cash them in.

4. Do not make a direct cash gift. While cash gifts or distributions in a will may seem like the simplest solution to giving grandchildren money, the process is rife with potential pitfalls. With a direct cash gift, there is no way to protect the money – and your children could use the money themselves while the grandchildren are still minors. Also, there are more serious tax consequences involved when making a direct gift of cash. The result can be a financial burden on future generations.

5. Create an educational savings plan. There are several tax-friendly accounts that individuals can use to save money for their children and grandchildren’s education. 529 Savings Plans and Educational-focused IRA accounts both provide low-tax or tax-free ways to provide for college. These are outstanding choices when you ONLY want the inheritance money to be used for the grandchild’s higher education.

Taking the time to hire a lawyer and plan for your grandchildren’s future is one of the smartest estate planning moves that an individual can make. Financial futures look much brighter for your grandchildren when you take the time to follow one or more of the helpful tips above.

Rich people are just like you and me, except they use $100 bills as coffee filters and have a tendency to be much, much weirder. Case in point, check out these strange wills and trusts from the upper crust of society. You’ll laugh, you’ll cry, you’ll wonder why you didn’t marry money.

Leona Helmsley

Granted, not too many creatures with two legs liked Leona that much when she was alive, but is that really a good reason for the Queen of Mean to to will $12 million to her dog? Full disclosure: Helmsley gave a large portion of the fortune she inherited from her husband to charity and her children, but still…how many chew toys and pig ears can you go through in your life?

William Randolph Hearst

The newspaper magnate’s will was as a long as a phone book and just as exciting to read, except for one strange provision tucked in at the end. As a final challenge to those who claimed he fathered children out of wedlock during his life, Hearst proclaimed that the estate’s executors would pay one dollar to anyone who could prove that they were his love-child. Nobody ever stepped up to try and claim the money. Perhaps if he had sweetened the pot a little.

Eleanor E. Ritchey

Again with the dogs! Ritchey was heir to the Quaker State Motor Oil fortune, and when she died in 1968, she willed her five million dollar fortune to her 150 dogs. Not willing to stand by and let rover steal their inheritance, Ritchey’s children contested the will and lost – plus, by then the estate was worth 9 million dollars. The estate continued to care for the dogs until the last one died in the 1980’s, at which time the money was donated to the Auburn University research department for animal diseases.

Janis Joplin

When the rock singer died of an accidental drug and alcohol overdose in 1970, she left her considerable estate to her parents- except for $2,500 of the money which was earmarked for an all-night party to be thrown in her honor. Lesson learned.

Harry Houdini

Well, nobody will ever accuse the great illusionist of not being a romantic. When Houdini died, he left his wife with a 10-word secret code and told her that he would use it to contact her from the afterlife. His plan, he explained, was to use the code as verification that it was really him speaking (and not some OTHER magician from beyond the grave trying to make a move on his wife). And for the answer to your next great trivia question, those words were:

“Rosabelle…answer…tell…pray…answer…look…tell…answer…answer…tell…”

Henry Durrell

When this Bermuda-based multi-millionaire died, he had three favorite nephews – each of whom was hoping to inherit their uncle’s sprawling luxury estate. Durrell’s will directed the executor to hold a game of dice after the reading of the will. The winner of the game would be left the estate. Richard Durrell won the game, while the other two nephews presumably never gambled again.

Although the probate process varies from state to state, there is a basic order and process to the proceedings that is, for the most part, universal around the country. The following is a look at the steps one must follow during probate in order to insure that all financial matters of the estate are handled in the correct manner and in a timely fashion.

Steps in the Probate Timeline:

• Step 1: Filing a petition for probate

The first step in the probate process is filing all the required paperwork with the court. Check with an attorney or your state’s probate court to make sure all the documents are handled properly.

• Step 2: Probate hearing

Several weeks after your paperwork has been filed, there will be a probate hearing to help determine the validity of the estate and confirm that the process is adhering to the law from the start.

• Step 3: Issuing the letters of administration and filing the order

During this part of the probate process, the names of those representing the estate will officially be entered into the court record. The order that begins payment to creditors will also be filed at this point.

• Step 4: Notice to creditors

This is one of the primary steps of the probate process. During the notice to creditors period (which can take several months), an inventory is prepared containing all debts and assets of the estate. There will be a search for all creditors to which the estate owes money. Also, the IRS will be contacted so that the federal and state tax status of the estate can be determined as well. Finally, this is also the time in which the sale of assets owned by the estate can begin.

• Step 5: Paying all creditors

When all the creditors of the estate (including the Internal Revenue Service) have been located, and the amount they are owed has been ascertained, it is time to pay them all.

• Step 6: File additional paperwork with the court regarding completion of above steps.

Next, the court must be notified, via filing, that all the creditors have been paid. It is at this point that a formal request (a petition) to distribute funds to those named in the will or trust will be made.

• Step 7: Petition hearing

Approximately four weeks after step six is complete, there will be a hearing to confirm that all the paperwork has been filed properly and that the estate’s debts with its creditors have all been settled to the satisfaction of the court.

• Step 8: Distribution

Sometime during the weeks that follow the petition hearing, the court will issue its ruling on the case. If everything goes according to plan, the distributions to those named in the will or trust can now be made. Also, at this time, attorney’s fees for the probate process will be paid to the lawyers representing the estate.

Probate can be a complicated process. That is why it is crucial that the executors or other individuals in charge of the estate hire experienced probate attorneys to handle all of the steps listed above. Probate attorneys can bring about a speedy resolution to all debts owed by the estate, and see to it that those who are scheduled to receive payment as a result of being named in the will receive their money (or property) in a timely fashion.