Family

Stepchildren and Adopted Children Inheritance Rights

If a loved one died without a Will, it can feel like a puzzle to determine who will inherit from the estate.

The legal term for dying without a Will is intestate. When you die intestate, the Nebraska probate code determines who will inherit your estate. The issue (children) of a Decedent will inherit the person’s intestate estate if the person did not have a surviving spouse. However, what qualifies as a child?

In Neb. Rev. Stat. § 30-2309 the Nebraska Probate Code defines what constitutes a child for intestate succession purposes. A child who has been adopted by the Decedent has the exact same rights to inherit from their adoptive parent as the biological children do. This statute does not work in reverse, though. Once you have been adopted you are no longer considered a child of your biological parent and cannot inherit from them.

In Nebraska, a stepchild has no right to inherit from their stepparent who died intestate. Since there is no legal or blood relationship, the law gives them no right to inherit from an intestate estate. If you have a stepchild and want to make sure they are included in your estate, then proper estate planning is critical.

If a parent makes a Will including their stepchild, the stepchild by default is considered a “class 3 beneficiary” and taxed at the highest rate possible for inheritance taxes—presently 18%. This can be a substantial burden and can be somewhat unfair when the biological children are taxed at a much lower rate in the same estate. The Nebraska Inheritance Tax laws, however, do provide a method for mitigating this tax.

If the stepchild can show that for a ten (10) year period prior to the stepparent’s death the decedent stood in loco parentis, or stood in the shoes of a parent, then the stepchild is entitled to be taxed at the same rate as a biological child. The determination of whether a Decedent stood in loco parentis is a multi-part test. It requires the Decedent hold themselves out as the parent, determination of whether they exercised parental authority, whether they assumed responsibility for the stepchild, among other factors. Claiming this beneficial tax status will require presenting evidence to the county attorney and should not be attempted without an attorney.

Just to reiterate, stepchildren have no inheritance tax rights under the laws of intestate succession, however, they do qualify for favorable tax treatment. Adopted children, on the other hand, have full rights to inherit by intestate succession, and are also subject to the same tax rate as biological children. If you have lost a loved one and think the determining heirs and paying inheritance tax seems like a puzzle—you’re right. The experienced probate attorneys at Carlson & Blakeman LLP can guide you through the probate process and help put the pieces together. Give us a call at (402) 858-0996.

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