Not everyone is excited to be left an inheritance. There could be many personal situations that would cause you to refuse an inheritance left to you by a loved one. If you are going through school, receiving a large sum of money could affect your ability to receive student aid. If you are older, you may not be eligible to qualify for Medicaid. Another situation could be that if you are already wealthy, gaining any funds from an inheritance could increase the value of your estate which would lead to paying more taxes from your estate when you die. The law does understand these issues can happen and you do not have to receive an inheritance if you do wish to.
Legally Refusing an Inheritance
In some states, you will have to write a disclaimer and have it notarized to legally decline an inheritance. Some states require specific forms to be completed. Just by telling the executor you do not wish to accept the inheritance is never sufficient. Usually you will have to turn down the inheritance prior to taking any portion of it. For instance, if the inheritance provides you with funds and you decide to accept these funds, you cannot deny the asset later. There are statutes of limitations could occur as well. Some states require that you decline the inheritance within nine months. The laws surrounding refusing an inheritance vary by state so it is important to speak with an attorney, like a estate planning lawyer State College, PA relies on, before deciding.
If the deceased has created a will and has you as a beneficiary and you decide to decline the inheritance, most states will treat this as if you died before the deceased. The executor will then have to probate the will as if you have died and were not able to accept your inheritance. Any assets that would have been yours will be put back into the estate.
After your inheritance is put back into the estate, the terms of the will decide who receives your share. Most wills include action items for what would occur to your portion of the estate if you were to have died before the deceased. Because denying your portion of the inheritance views it the same as if you were to have died, your inheritance would then go to whoever the deceased has decided will receive it if you died. This could be your spouse, children, a distant relative, or a charity. In most instances, once you decline an inheritance, you do not have any say on to who the funds go to instead.
Dying without a Will
If someone dies without creating a will, their state’s intestacy laws come into play. These laws dictate who receives what from the deceased’s assets based on the type of relationship between the deceased and their beneficiaries and they also decide what assets go first. If you receive an inheritance from an intestate succession and deny it, it will go to the next person in line.
Thanks to our friends and contributors from De Boef Lucchesi, P.C. for their insight into estate planning.