RETIREMENT PLANNING ESTATE PLANNING
Next of Kin
By
TROY SEGAL
Reviewed by
ERIC ESTEVEZ Updated May 27, 2021
TABLE OF CONTENTS
What (and Who) Is Next of Kin?
Understanding Next of Kin
Jurisdiction Over Next of Kin
Insurance and Retirement Plans
If You Are Next of Kin
What (and Who) Is Next of Kin?
Next of kin is usually defined as a person's closest living blood relative, someone who may have inheritance rights, and obligations.
KEY TAKEAWAYS
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Understanding Next of Kin
The next-of-kin relationship is important in determining inheritance rights if a person dies without a will and has no spouse and/or children. They may also have responsibilities during and after their relative's life. For example, the next of kin might need to make medical decisions if the person becomes incapacitated, or take responsibility for their funeral arrangements and financial affairs after their relative dies.
Next of kin is sometimes interpreted in a broader sense, to include the spouse or any person who would receive a portion of the estate by the laws of descent and distribution if there is no will. In this context, next of kin would include a spouse i.e. a person related by the tie of legal marriage. Identifying a next of kin is less important, at least legally, if the person who died (the "decedent") left a will or is (or was) married.
A legally and properly executed will covering inheritable property usually takes precedence over next-of-kin inheritance rights. However, if the deceased person left no will their estate passes to a surviving spouse in nearly all states. If the couple is divorced, postnuptial agreements might terminate or alter these rights. If a surviving spouse remarries, it generally does not affect their inheritance rights.
In the absence of a surviving spouse, the person who is next of kin inherits the estate. The line of inheritance begins with direct offspring: children, grandchildren, great-grandchildren and so on. The legal status of stepchildren and children who are adopted varies by jurisdiction. If the deceased had no offspring, the line of inheritance moves upward to their parents. If the parents are no longer alive, collateral heirs (brothers, sisters, nieces and nephews) are next in line.
As next of kin, you may inherit some of your relative's digital assets and obligations. For example, Microsoft provides a deceased subscriber's next of kin with a DVD of the decedent’s entire Outlook account so the relative may assume paying bills, notify business contacts, close the account and so on.1
As the next of kin, you also may inherit some of your relative's digital assets and obligations, which could include the deceased subscriber's email account and contact data.
Jurisdiction Over Next of Kin
The specifics of determining next of kin and inheritance vary by jurisdiction. In countries such as the United Kingdom, matters involving inheritance are handled in accordance with various succession laws. In other countries, next-of-kin laws are in place for settling the estates of people who die intestate.2
In the United States, the right of a relative to inherit or receive property by inheritance exists through the operation of state laws and legislative action. State law establishes next-of-kin relationships and inheritance priorities. The legislature of a state has plenary power (complete authority) over the distribution of property within the borders of the state. The deceased's estate becomes state property if no legal heir can be identified.
What if someone dies in one state and owns assets in another? With personal property, the law of the state where the decedent resides generally supersedes the laws of other states.
Insurance and Retirement Plans
The recipient(s) of proceeds from a decedent's life insurance policy, or their retirement accounts such as 401(k)s and individual retirement accounts (IRA), are designated in a different way than other bequeathable assets. The funds from these instruments go to the beneficiaries listed by the decedent on these policies or accounts themselves, even if the decedent designated different people in a will.3
Next-of-kin status is irrelevant unless the decedent was married and lived in a community property state. If so, by law, the surviving spouse is entitled to an equal portion of any funds earned or accrued during the marriage, unless the spouse had signed a waiver.4 If the spouse is also deceased, and there are no living listed beneficiaries, those assets may flow to the deceased's next of kin, depending on state law.
Certain other rules apply to individuals who inherit retirement plan assets. However, those rules have been modified recently following the passage of the Setting Every Community Up For Retirement Enhancement (SECURE) Act in December 2019.5
Prior to the passage of the SECURE Act, non-spousal beneficiaries of an inherited IRA were required to commence required minimum distributions if the original account owner had commenced taking their own RMDs prior to their death. If the account owner had not commenced taking their own RMDs, the non-spousal beneficiary was able to wait until they had reached the age to commence taking RMDs to begin taking them.
Prior to the passage of the SECURE Act, non-spousal beneficiaries who inherited an IRA previously were able to stretch out the benefits for their lifetime. However, under the new law, IRA beneficiaries must cash out their inherited retirement account within 10 years. There are certain exceptions, such as for the chronically ill, the disabled and children under the age of 18.6
Frequently Asked Questions
Why Is Determining Next of Kin Important?
The next-of-kin relationship is important in determining inheritance rights if a person dies without a will and has no spouse and/or children. They may also have responsibilities during and after their relative's life. For example, the next of kin might need to make medical decisions if the person becomes incapacitated, or take responsibility for their funeral arrangements and financial affairs after their relative dies.
How Is Next of Kin Determined?
The specifics of determining next of kin and inheritance vary by jurisdiction. In countries such as the United Kingdom, matters involving inheritance are handled in accordance with various succession laws. In other countries, next-of-kin laws are in place for settling the estates of people who die intestate. In the United States, the right of a relative to inherit or receive property by inheritance exists through the operation of state laws and legislative action.
Will Next of Kin Automatically Get Life Insurance and IRA Benefits?
The recipient(s) of proceeds from a decedent's life insurance policy, or their retirement accounts such as 401(k)s and individual retirement accounts (IRA), are designated in a different way than other bequeathable assets. The funds from these instruments go to the beneficiaries listed by the decedent on these policies or accounts themselves, even if the decedent designated different people in a will. Next-of-kin status is irrelevant unless the decedent was married and lived in a community property state. If so, by law, the surviving spouse is entitled to an equal portion of any funds earned or accrued during the marriage, unless the spouse had signed a waiver.
ARTICLE SOURCES
Related Terms
Inheritance
Inheritance refers to the assets a person leaves to others after they die. Read about inheritance taxes and the probate process. more
Testamentary Will
A testamentary will, aka a traditional last will and testament, is a legal document used to transfer a person's assets to beneficiaries after death. more
Intestacy Definition
Intestacy refers to the condition of an estate of a person who dies without a will, and owns property that is worth more than their outstanding debts. more
Understanding the Estate Tax
An estate tax is a federal or state levy on inherited assets whose value exceeds a certain (million-dollar-plus) amount. more
Bona Vacantia
Bona vacantia, also known as vacant goods, refers to property without a clear owner. Bona vacantia assets may be abandoned or unclaimed by its owner. more
Last Will and Testament
A last will and testament is a legal document detailing your wishes regarding assets and dependents after your death. Find out how to make a will. more
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