How to Refuse an Inheritance

How to Refuse an Inheritance

by Michelle Fabio, Esq., August 2015

Can you refuse an inheritance? Is it even possible?

The simple answer is that yes, you can refuse an inheritance, also called disclaiming an inheritance. It may seem strange to imagine that you might not want property or money left to you in a last will, but for some people, the situation is quite real. And lucky for those who would like to disclaim an inheritance, the law provides procedures to follow in order to do so legally and properly.

Read on for more information as to why you might want to refuse an inheritance as well as how to go about refusing an inheritance, should you decide to do so.

Why Would I Want to Refuse Inheritance?

There are several reasons why someone might choose to refuse or disclaim an inheritance, including but not limited to the following:

  • You want to keep the value of your estate under a certain amount. Most likely this amount would be the threshold for the application of federal and/or state estate taxes. If a potential inheritance could push you over the limit, it may be financially advisable for you and your loved ones to refuse the inheritance.
  • Accepting the inheritance would make you ineligible for certain programs based on financial need. Eligibility for student loans or government assistance, like Medicaid, could be affected adversely by an inheritance that puts you over the qualifying amounts.
  • You would prefer that someone else, such as your child, receive the inheritance. Instead of accepting the inheritance and gifting it to your children, which could raise the issue of paying gift tax depending on the amount of the asset bequeathed, you could choose to disclaim the inheritance. Be careful here, though, as you don’t get to choose who will inherit the property in your place; the will’s wording still decides where the inheritance will go instead.
  • You just don’t want the inheritance. Maybe your uncle has left you a run-down house in an undesirable location and you would just prefer not to deal with the property at all. In this case, you might strongly consider just saying “no thanks” via disclaimer.

Can I Refuse Inheritance?

Yes. The laws surrounding renouncing your right to an inheritance vary by state, but in most instances, you will be able to disclaim an inheritance provided you follow the correct procedure.

How Do I Disclaim Inheritance?

To disclaim an inheritance, you must file a written disclaimer that states your irrevocable intention to refuse the bequest. A disclaimer usually must be signed, notarized, and filed with the probate court and/or the executor of the last will in a timely manner (within nine months of the death of the decedent or, if the disclaiming beneficiary is a minor, after he or she reaches the age of majority).

What Happens to the Refused Inheritance?

For legal and tax purposes, the person who disclaims an inheritance never owns the asset at all, which means he would not be responsible for inheritance taxes, etc. This also means, however, that the person who has disclaimed the inheritance doesn’t get to choose who does get the assets. Instead it goes to the contingent beneficiary as provided for in the will (or in the case of someone who has died without a will, as provided for in the state's laws of intestacy).

Remember that as with all estate planning decisions, state law varies greatly—and so do specific financial and familial situations. If you are considering disclaiming an inheritance, make sure you have all the pertinent information available before refusing a bequest, because, again, a disclaimer cannot be revoked even if you later change your mind.

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