Although it is not common, beneficiaries do not always want the inheritance left to them by a decedent or to which they are entitled under state intestate succession laws. If you find yourself in a position where you do not want to accept an inheritance, what are your options? The Grand Forks estate planning attorneys at German Law discuss why you might not want to accept an inheritance and what to do if that is the case.
Why Would I Not Want an Inheritance?
It sounds crazy to refuse an inheritance – until you find yourself in a position where you have a reason to do so. Some common reasons people do not want to accept an inheritance (in legal terms “disclaiming”) include:
- Tax consequences – some states directly tax an inheritance you receive. Even if the inheritance isn’t directly taxes, 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 in bankruptcy. If you are already in serious financial trouble, and the inheritance would simply 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 at the time because disclaiming an inheritance while in the process of 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.
- Real property is problematic. 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 or mold, asbestos, or lead paint, the clean up or remediation may be extremely costly – particularly if the state or federal authorities oversee it.
- Loss of 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 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.
What You Need to Know If You Do Not Want to Accept an Inheritance
If you do not want to accept an inheritance you cannot simply say you don’t want it. Disclaiming an inheritance requires a written disclaimer. You should consult with an experienced probate attorney if you want to disclaim an inheritance; however, in meantime you should know that:
- 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.
- You must disclaim your entire inheritance.
- A disclaimer is irrevocable. Once you have disclaimed your inheritance you cannot interfere with what happens next.
Contact Grand Forks Probate Attorneys
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to turn down an inheritance in North Dakota, contact the Grand Forks probate attorneys at German Law by calling 701-738-0060 to schedule an appointment.
- Updating Your Life Insurance - September 29, 2022
- What’s Estate Planning Got to do with Interest Rates – Part II - September 27, 2022
- What’s Estate Planning Got to do with Interest Rates – Part I - September 22, 2022