Can I Turn Down an Inheritance?
When a family member or close loved one passes away, family members typically start thinking about what they might inherit from the decedent’s estate. Likewise, when there is controversy or conflict over an estate, it is most often the result of two or more heirs disagreeing over the inheritance to which they feel they are entitled. What happens if you do not want the inheritance left to you? Can you refuse to accept an inheritance? An estate planning attorney at Zimmer Law Office explains how you turn down an inheritance.
Why Would I Not Want to Accept an Inheritance?
Who turns down a gift? There are several very good reasons why you might not want to accept (in legal terms, “disclaim”) an inheritance, including:
- Unwanted tax consequences. Some states directly tax an inheritance you receive. Even if the inheritance isn’t directly taxed, there may be tax consequences down the road to accepting the gift. If the next person in line to receive the inheritance is your child who is in a much lower tax bracket, and you plan to spend the money on him/her or leave it to him/her anyway, it can make more sense to disclaim and allow it to pass immediately.
- You are in serious debt or bankruptcy. If you are already in serious financial trouble, and the inheritance would be lost to creditors without paying off all your debt, disclaiming can make sense. Be careful, however, if you are in the middle of bankruptcy at the time because disclaiming an inheritance while seeking bankruptcy protection can be problematic. If the Trustee finds out, he/she could go after the assets anyway, and you could be in trouble for not divulging the inheritance.
- Personal reasons. Maybe you had a contentious relationship with the decedent and do not feel you can accept the inheritance.
- Problematic property. Sometimes, real property isn’t worth it. If the property is run-down or isn’t very valuable, the taxes and upkeep could be more than the property is worth. Environmental concerns should also be considered. If the property is contaminated or full of mold, asbestos, or lead paint, the clean-up or remediation may be extremely costly – particularly if the state or federal authorities oversee it.
- It will jeopardize benefits. If you are dependent on assistance programs such as Medicaid, Veterans Aid and Attendance, or Supplemental Security Income (SSI), an inheritance could disqualify you from those benefits until your assets fall below the program limits once again.
- It’s the right thing to do. Sometimes a parent or other loved one did not get around to making changes to their estate plan that you know they meant to make. For example, if your father recently remarried and you know he intended to include his new wife in his Will be never got around to doing it, disclaiming your inheritance might be the right thing to do.
How Do You Turn Down an Inheritance?
Disclaiming an inheritance requires a written disclaimer. There are several important reasons why you should always consult an experienced estate planning attorney if you are considering rejecting an inheritance.
- For a disclaimer to be valid, it must be in writing, contain the correct language, and be delivered to the right person within a specific amount of time.
- It is crucial that you know with certainty who will inherit if you disclaim your inheritance.
- Certain actions you take could prevent you from being able to disclaim your inheritance.
- A disclaimer is irrevocable. Once you have disclaimed your inheritance, you cannot interfere with what happens next.
Contact a Loveland Estate Planning Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about estate planning, contact an experienced estate planning attorney at Zimmer Law Office by calling 513-721-1513 to schedule your appointment today.