What is qualified acceptance? It is a declaration by an heir accepting the inheritance on the condition that the deceased's debts and any *bequests will be paid only to the extent of the assets the heir acquires through the inheritance.
In other words, the heir's liability for the debts is limited to the value of the inherited estate.
(*Bequest: the act of giving part of one's property to another person, free of charge, by will.)

Renunciation of inheritance is the act of refusing the automatic transfer of all of the deceased's property rights and obligations to the heir. In other words, the heir gives up not only the debts but the assets as well.

With qualified acceptance, the heir retains his or her status as heir. Because debts are paid only up to the value of the inherited assets, the downside is limited, and if the estate's assets exceed its debts, the heir comes out ahead. Even if debts remain after payment from the estate, once the liquidation process is completed the qualified acceptor bears no further liability for them. On the other hand, qualified acceptance involves the burden and risk of preparing an inventory of the estate, the payment of taxes such as acquisition tax and capital gains tax, the complexity of the pro-rata payment procedure, and potential liability for damages arising from improper payments.

When an heir renounces the inheritance, he or she loses the status of heir, and the estate passes to the next heirs in line. Filing an application for renunciation within the deadline allows the heir to avoid succeeding to the debts. Be aware, however, that because the inheritance passes to the next heirs in order, ultimately every heir must renounce. Procedurally, renunciation is far simpler. If the estate has remaining assets but you do not have a clear picture of its debts, qualified acceptance may be the better option.

Even after qualified acceptance is granted, heirs must go through a complex process to settle the estate, including giving public notice to creditors.

• If this process is delayed, the heir may be held liable for damages.
• If creditors dispute the debts, the heir must respond to each one individually.

To ease this burden on heirs, the law provides for estate bankruptcy.

• A court-appointed bankruptcy trustee handles the cumbersome liquidation process.
• The estate is separated from the heirs' own property, and only the estate is liquidated and distributed to the estate's creditors, legatees, and others.

Note, however, that in cases of special qualified acceptance, an estate bankruptcy order may not be granted.

The method of division is decided in light of the kind and nature of the property and rights making up the estate, together with all other circumstances. Division in kind is not mandatory; division by payment of value or division of sale proceeds is equally permissible. If the deceased left no will, or the co-heirs cannot reach an agreement on division, a petition for division of inherited property may be filed with the Family Court.

• Division in kind: the estate is divided among the heirs as it stands
• Division of sale proceeds: the estate is sold and the proceeds are divided among the heirs
• Division by payment of value: one heir buys out the other heirs' shares, pays them their value, and becomes the sole owner

The division of inherited property takes effect retroactively to the commencement of inheritance: each heir is deemed to have owned his or her share from the moment the inheritance began. In practice, however, legal complications frequently arise after the division.

In any inheritance dispute, understanding the flow of the estate's assets is the single most important thing. It is therefore advisable to obtain the assistance of an experienced attorney in advance, whether to draw up a written agreement on the division of inherited property, to file a petition for division, or to be fully prepared for the process of responding to one.