Nebraska’s Estate Plan for your Farm
An updated version of this article is now available on farm.unl.edu.
If you do not have a will or trust, Nebraska laws establish the legal process for transferring your assets to your heirs. The county judge supervising the administration of your estate will appoint an executor (also called a personal representative). The executor will follow Nebraska’s probate laws to transfer your assets and pay any taxes due.
The probate judge will appoint an executor to oversee the disposition of your estate. The judge would probably appoint your surviving spouse or an adult child as executor. If an executor is not identified in 45 days of death, a creditor can ask the judge to be appointed as executor. The executor will be in charge of organizing your assets, paying your debts and any taxes due, and distributing any remaining assets among your heirs according to Nebraska’s probate code. The executor will usually require the assistance of an attorney during the probate process.
Transfer of Assets
Without a will or trust, assets remaining after your debts and taxes are paid will be passed to your closest relatives. The laws that govern this transfer are called “intestate succession laws.” Who receives these assets depends on their relation to you.
If you only have one surviving heir (a spouse, child, parent, or sibling) and no other living decedents, that person will inherit all of your remaining intestate property. If you have multiple heirs, intestate property transfer becomes more complicated.
In Nebraska if you have a surviving spouse and children, the spouse will inherit the first $100,000 of the intestate property plus half of any remaining intestate property and the children will inherit the rest. If the children are from someone other than your current spouse, the current spouse will inherit half of the intestate property and the children will inherit the rest.
If you have a spouse and parents, the spouse will inherit the first $100,000 of the intestate property plus half of any remaining intestate property and the parents will inherit the rest.
Assets that are payable or transferred-on-death (life insurance proceeds, retirement accounts, securities, living trusts, beneficiary deeds etc.) are usually not subject to intestate succession laws. They will be transferred according to the parameters of the agreement. Furthermore, jointly owned property will pass to the surviving owner(s).
Nebraska law also includes a survivorship period—an heir must outlive the deceased by 120 hours in order to be eligible for their inheritance.
The state of Nebraska imposes an inheritance tax on property left either by Nebraska residents or by non-residents who died owning real estate in Nebraska. The rate at which someone is taxed is based on their relationship to the deceased.
A surviving spouse is exempt from Nebraska’s inheritance tax regardless of the amount inherited.
Close relatives include parents, grandparents, siblings, children, grandchildren, and other lineal descendants including legal adoptions. Persons in this category who inherit up to $40,000 are exempt from inheritance tax. If the fair market value of their inheritance is more than $40,000, they are taxed 1% on the amount exceeding $40,000.
Distant relatives include aunts, uncles, nieces, nephews, any lineal decedents of these persons and any spouses of these persons. Persons in this category who inherit up to $15,000 are exempt from inheritance tax. If the fair market value of their inheritance is more than $15,000, they are taxed 13% on the amount exceeding $15,000.
Other persons who inherit up to $10,000 are exempt from inheritance tax. If the fair market value of their inheritance is more than $10,000, they are taxed 18% on the amount exceeding $10,000.
Many people would not choose to have their property distributed in this fashion after their death. Most married couples would choose to leave their all property to their surviving spouse. If they have substantial assets, they might choose to leave their property to their surviving spouse for life with the property going to their children when the surviving spouse dies. But this will not happen unless you work with an attorney to develop a will or trust. To have more control over what happens to your property when you die, you should meet with an attorney to explore your options.