When a loved one passes away, the survivors typically say very little out loud about how the decedent’s estate assets are to be distributed. The reality, however, is that the assets of a decedent must be passed down to the beneficiaries and/or heirs of the estate pursuant to the decedent’s Will or trust or using the state’s intestate succession laws. If you recently lost someone close to you, there is a good chance that the decedent left you an inheritance. What do you do if you don’t want that inheritance? The Overland Park estate planning attorneys at Parman & Easterday explain how to reject an inheritance someone left you.
Why Would Anyone Not Want an Inheritance?
Initially, the idea that anyone would turn down an inheritance sounds pretty unlikely; however, when you stop and consider the following reasons to reject an inheritance it doesn’t sound as crazy or unlikely as it did initially.
- Accepting it isn’t the right thing to do. It is far from uncommon for family members to be left out of a Will or for the terms of a Will to seem unfair to the surviving family members. If you believe that someone else should receive some – or even all – of an inheritance to which you are entitled, you may decide not to accept that inheritance. It might be that the decedent never got around to making changes to a Will that you know he intended to make, causing a new wife or child to be disinherited unintentionally. A parent might have intentionally disinherited a sibling of yours and you feel that was the wrong thing to do. Whatever the circumstances that cause you to feel as though you are not entitled to the inheritance, you have a right to refuse the inheritance.
- The tax consequences make rejecting the inheritance a wiser option. A handful of states impose an inheritance tax. There may also be other indirect taxes associated with accepting the inheritance. 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 her or leave it to her anyway, it may make more sense to disclaim and allow it to pass immediately.
- Accepting the inheritance could cause you to lose state/federal assistance. If you are dependent on assistance programs such as Medicaid, Veterans Aid and Attendance, or Supplemental Security Income (SSI), an inheritance could disqualify you for those benefits until such time as your assets fall back below the program limits once again.
- You don’t like the strings attached to the inheritance. Sometimes a decedent leaves a beneficiary an inheritance, but the money can only be spent on specific things or the beneficiary must fulfill certain conditions in order to receive the inheritance. If you decide the strings aren’t worth it, you can reject the inheritance.
- The inheritance would be lost to creditors because you are in serious debt or in 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 a bankruptcy because disclaiming an inheritance while in the process of seeking bankruptcy protection can be problematic. If the Trustee finds out, he could go after the assets anyway and you could be in trouble for not divulging the inheritance.
- Real property isn’t worth it. Sometimes, real property simply 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 are in charge of it.
Things to Consider If You Decide to Disclaim an Inheritance
Disclaiming, or rejecting, an inheritance is not as simple as just telling the Executor “no thanks.” The law requires a written disclaimer if you wish to reject an inheritance. If you are considering rejecting an inheritance, it is in your best interest to consult with an experienced estate planning attorney to ensure you understand all the consequences and ramifications of that rejection, including:
- The need to put your disclaimer in writing, using the correct language, and delivering it to the right person within a specific amount of time.
- Knowing, with certainty, who will inherit if you disclaim your inheritance.
- Knowing what action on your part could prevent you from being able to disclaim your inheritance.
- Knowing that in some circumstances you must disclaim your entire inheritance.
- Knowing that a disclaimer is irrevocable. Once you have disclaimed your inheritance you have no control over what happens next.
Contact Overland Park Estate Planning Attorneys
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding an inheritance you do not want, contact the experienced Overland Park estate planning attorneys at Parman & Easterday by calling 405-843-6100 or 913-385-9400 to schedule your appointment today.