What is a Laughing Heir?

I heard about “laughing heirs” for the first time during my Wills, Trusts, and Estates class in law school. A laughing heir is an heir of an estate so remotely related to a decedent that he or she feels no grief over the decedent’s death.

The idea that someone very distantly related to a deceased person would unexpectedly inherit a large estate seemed improbable to me.

Surely an individual with a vast fortune would make contingent plans if no close relatives were living. Or perhaps they would give their fortune to charity, fund a scholarship, or give it to friends and neighbors rather than risk it would pass to an unknown distant relative, or perhaps even escheat to the state.

Most of the time, contingency plans are made, and distant family members do not inherit an estate. But every once in a while, someone unexpectedly becomes the heir of a great fortune when a distant relative dies. And in most cases, they are stunned that something like could even happen and suspect they may even be the target of a scam.

The first time I encountered a laughing heir was a few years ago. I received a phone call of a man who had been notified that he was the heir of a very large estate. He had been abandoned by his biological father as a baby, and never formed a relationship with him. His biological father had just one sibling, a brother who was very wealthy, single, and had no children of his own. His biological father predeceased his uncle, who died without a Will. A lawyer appointed by a Court to research the existence of unknown heirs, found him, and he inherited this biological uncle’s fortune.

And just a couple of weeks ago, I spoke with a man whose second cousin had recently passed away. By all appearances, she was destitute. She lived very modestly in a home he described as a shack. No one suspected that she had an estate valued in the tens of millions until family members looked through her private papers after she passed away and discovered evidence of a huge stock portfolio.

She had a Will, but it named her deceased brother as her beneficiary, and did not name a contingent beneficiary. Since she was not survived by parents, siblings (or their descendants), the Texas intestacy statutes dictate that the estate would be divided in two, with one half passing to distant relatives on the maternal side and the other passing to distant relatives on the paternal side.

The man who called me was a second cousin on the paternal side, who was acquainted with the decedent. He shared the fortune that passed to the paternal relatives with a sibling and an aunt. But the only heir on the maternal side was a first cousin, a half sibling of the decedent’s mother, who had no relationship with any family members and who must have received quite a shock when told she was the heir of a very large estate…the quintessential laughing heir.

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