Although Alaska levies no inheritance or estate tax, the federal estate tax may still apply, depending on the value of their estate. In this article, we break down Alaska’s inheritance laws, its probate process and what happens if you die in the state without a valid will. If you are trying to sort out your estate or inheritance plans and want professional guidance, the SmartAsset advisor matching tool can find you a financial advisor in your area who can help.
Does Alaska have an Inheritance Tax or an Estate Tax?
Alaska does not collect an estate tax or an inheritance tax. However, you’ll still need to grapple with the federal estate tax if your estate is over a certain size. In addition, if you are inheriting property from another state, that state may have an estate tax that applies. You will also likely have to file some taxes on behalf of the deceased.
Estate taxes and inheritance taxes are similar, but there are some important differences to note. Estate taxes are taken out of the deceased’s estate immediately after their passing, while inheritance taxes are imposed upon the deceased’s heirs after they have received their inheritance.
Other Necessary Tax Filings
When you die, there are many federal and estate tax situations that need to become a priority for those who survive you. Besides the state estate tax, you need to look out for the following:
- Final individual federal and state income tax returns – the federal and state tax returns are due by Tax Day of the year following the individual’s death.
- Federal estate/trust income tax return – due by April 15 of the year following the individual’s death
- Federal estate tax return – due nine months after the individual’s death, though an automatic six-month extension is available if asked for prior to the conclusion of the nine-month period
- This is required only of individual estates that exceed a gross asset and prior taxable gift value of $11.58 million in 2020
To file any of these estate-based returns, you’ll need to apply for an employer identification number (EIN) with the IRS. You can do this online, by fax or via mail.
Dying with a Will in Alaska
In order for your will to be valid in Alaska, you must sign your will in front of two witnesses, and your witnesses must sign your will within a reasonable time after witnessing your signature or acknowledgement. You do not have to notarize your will in order to make it legal. However, you can make your will “self-proving,” which helps to speed up the probate process. In order to do that you will need to go to a notary. A “self-proving” will speeds up the probate process because the court can accept the will without contacting the signing witnesses. You can make your will self-proving if you and your witnesses go to a notary and sign an affidavit that states who you are and that each of you knew you were signing the will.
Once the will is determined to be valid, the next step is the probate process. Alaska is one of the states that follows the Uniform Probate Code, a standard set of rules about probate. Probate proceedings are usually only required if the deceased person owned any assets in their name only. Other assets, also known as “non-probate” property, can generally be transferred to the other owner without probate.
You should remember that if you and your spouse divorce or your marriage is annulled, appointment of your spouse as a trustee or personal representative gets automatically revoked, as does any inheritance. To avoid this, your will must state that you still want your now divorced or annulled spouse to still be a trustee, personal representative, or inheritor in the event of your death.
Alaska has two ways of avoiding probate. One is an affidavit procedure that allows heirs to completely skip probate when the value of the estate is $50,000 or less after liens, encumbrances, and the value of vehicles that are $100,000 or less have been subtracted. All an heir has to do is prepare a short affidavit, stating that they are entitled to the property. Affidavits are signed under oath. When the person or institution holding the assets gets the affidavit and a copy of the death certificate, the asset is then released to the inheritor. There is a 30-day waiting period.
There is no need to use the simplified probate procedure if you are already going to use the affidavit procedure. In order to use Alaska’s simplified probate procedure, the executor files a written request with the local probate court asking to use the simplified process. The court can then authorize the executor to distribute the assets without needing to go through regular probate. The executor then distributes the property to the heirs and files a document with the court that states that they gave a closing statement and accounting to all heirs and known creditors, gave the assets to the inheritors, and that the estate meets the financial criteria to qualify for the simplified probate procedure.
In order to qualify for this process, the value of the estate must not be more than costs and expenses of administration, homestead allowance, family allowance, exempt property, necessary medical and hospital expenses of last illness, and reasonable funeral expenses.
Dying Without a Will in Alaska
If you die without a valid will, you end up losing control over what happens to your assets after your death. Alaska inheritance laws label these types of estates “intestate,” which means there is no will, or no valid will. The court will then follow intestate succession laws to determine who inherits your assets, and how much they get.
If there isn’t a will, the court appoints someone, usually an adult child or surviving spouse, to be the executor or personal representative. That person takes care of the estate of the decedent.
Although there are usually extenuating factors when someone dies intestate, it is best to avoid putting your loved ones through that kind of stress. If you’re not sure what kind of estate plan you want to make, you can seek the help of a financial advisor specializing in legacy planning.
Spouses in Alaska Inheritance Law
In Alaska, which is a community property state, if you die with a spouse and without a will, your spouse’s inheritance depends on whether for not you have living parents or descendants. Descendants include children, grandchildren, and great-grandchildren. If you have no living parents or descendants, your spouse will inherit all of your intestate property.
If you have living parents but no descendants, your spouse will inherit the first $200,000 of your intestate property. They will also inherit 3/4 of any remaining intestate property. Your parents will inherit any remaining intestate property after your spouse has gotten their share.
If you have children or other descendants with your surviving spouse, and your surviving spouse has no descendants from other relationships, your spouse will inherit all intestate property.
If part of your intestate property is inalienable stock in a corporation organized under the Alaska Native Claims Act, the surviving spouse’s inheritable share depends on whether or not you have descendants. If you don’t, your spouse gets all of it. If you do, your spouse and descendants split the stock.
Children in Alaska Inheritance Law
If you have no spouse and any of your children are alive, they will be the only heirs to your estate. However, if you die with a surviving spouse and descendants who are not your surviving spouse’s descendants, your spouse will inherit the first $100,000 of intestate property and then half of what remains. Your descendants then inherit the other half.
If you and your spouse have children or other descendants and your spouse has descendants from another relationship, the amount your spouse inherits changes. In that situation, they would inherit the first $150,000 of your intestate property, and then half of the remaining intestate property. Your descendants would then inherit the other half.
Intestate Succession: Spouses and Children Inheritance Situation Who Inherits Your Property Children but no spouse – Children inherit everything Spouse but no descendants or parents – Spouse inherits everything Spouse and descendants from you and that spouse, and spouse has no other descendants – Spouse inherits everything Spouse and descendants from you and that spouse, and the spouse has descendants from someone other than you – Spouse inherits first $150,000 of property and half of any remaining property
– Descendants inherit the rest of remaining property Spouse and descendants from you and someone other than that spouse – Spouse inherits first $100,000 of property and half of any remaining property
– Descendants inherit the rest of remaining property Spouse and parents – Spouse inherits first $200,000 of property and 3/4 of any remaining property
– Parents inherit the rest of remaining property
Under Alaskan intestate law, legally adopted children have just as much right to their intestate share as biological children do. In addition, if the decedent placed their child up for adoption and that child was adopted by another family – other than their spouse – they are not legally eligible to receive intestate inheritance from the decedent, unless the decree of adoption specifically provided for continuation of inheritance rights. However, foster children and stepchildren who were never legally adopted by the decedent are not eligible to receive a share as the decedent’s child. Children born outside of marriage still receive their share as long as a court establishes paternity.
Children born after your death, also known as posthumous children, can still receive their share if they are born after the decedent’s death, as long as the child survives at least 120 hours after birth. Grandchildren will receive a share only if their parent is not alive to inherit.
Unmarried Individuals Without Children in Alaska Inheritance Law
Intestate succession in Alaska, which does not recognize common law marriages, if there is no surviving child or spouse is arranged as in the chart below:
Intestate Succession: Extended Family Inheritance Situation Who Inherits Your Property Parents – Parents inherit everything Siblings but no parents – Siblings inherit everything
Although there’s an intestate process designed to make sure your family inherits, it is generally best to write your own will to ensure that all of your property ends up in the hands you want it in. If no eligible relatives can be found, your property will end up being the property of the Alaska government.
Non-Probate Alaska Inheritances
The probate process can be difficult and expensive, so you’ll want to know about the non-probate options available in Alaska. These assets are also not affected by intestate succession laws, and instead go directly to the named beneficiary. Listed below are some of the assets that will not have to go through probate and instead go directly to the beneficiaries.
- Any property in a living trust
- Life insurance policies
- 401(k)s, IRAs, other retirement accounts
- Securities in transfer-on-death accounts
- Pay-on-death bank accounts
- Joint tenancy real property
- Property owned in tenancy by the entirety
- Community property with the right of survivorship
Other Situations in Alaska Inheritance Law
Alaska has a survivorship period. In order to inherit under Alaska’s intestate succession statutes, the heir in question must survive you by at least 120 hours. In addition, relatives conceived before you die but born after you die are eligible to inherit as if they had been born while you were alive.
Immigration status is irrelevant when it comes to inheritance. If a relative of yours is entitled to a share of your assets, they can inherit no matter what their citizenship status is. Half-relatives inherit as much as “whole” relatives. For example, your half-sibling would get the same share as any other sibling.
Resources for Estate Planning
Managing your own estate, or handling an inheritance from a loved one, can get complicated. That’s why many people choose to work with a professional.
The SmartAsset financial advisor matching tool will pair you with as many as three nearby financial advisors equipped to handle your estate and inheritance planning needs. If you’re ready to work with a financial advisor in your area, get started now.
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