Usually, questions relating to an inheritance are aimed at how much the inheritance is worth and how long it will take to actually receive the assets. It may sound strange, therefore, to see the question “Can you disclaim an inheritance?” There are circumstances, however, when a beneficiary may wish to reject, or disclaim, and inheritance – and doing so is not quite as simply as you may think.
An “inheritance” can consist of just about anything, including both tangible and intangible assets as well as both real and personal property. An inheritance is, after all, made up of the assets owned by a decedent at the time of death. Those assets may be incredibly complex and valuable – or they may be nothing more than personal items, such as clothing, that have no real value. Even if the inheritance left to you isn’t valuable you may wonder why you would need to formally “disclaim” the assets. There are some fairly common practical, financial, and legal reasons why people choose to reject and inheritance. Moreover, there are also legal reasons why you need to do more than simply tell the Executor of the estate that you don’t want your gift.
One common reason for disclaiming an inheritance is that the cost of accepting the assets will far outweigh the cost of rejecting it. For example, let’s say that your long lost aunt Mildred never married and died childless. In her Last Will and Testament she left you her home, which has been sitting vacant for the past several years because she spent those years in a long-term care facility. Unfortunately, the property is in a less than desirable area of town and need considerable work just to be safe to occupy. Furthermore, the taxes on the property were not paid for several years as well. You don’t have the funds to renovate the home and do not want to be responsible for trying to get rid of it. Disclaiming the gift seems the most practical choice.
Another common reason why you might want to reject an inheritance is found in the federal gift and estate tax. Imagine that your spouse died without a comprehensive estate plan in place. Instead, he used the unlimited marital deduction to leave you his entire estate. Though this does protect the assets from gift and estate taxes now, it may overfund your estate, simply putting off the evitable. By rejecting the gift, however, the assets may pass directly to the next beneficiary in line – likely your children – thereby avoiding a situation where your estate is hit hard by gift and estate taxes.
If you do decide to disclaim an inheritance there are certain procedures that must be followed. Though procedures vary by state, you will likely need to submit a formal notice of rejection in writing explaining your intention to disclaim the inheritance.
If you have additional questions or concerns about disclaiming an inheritance, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.