How an inheritance can be refused

Believe it or not when an inheritance is available there are some who decide to refuse it for one reason or another. When this decision is made, there will always be consequences involved.

Regardless of why you want to refuse, the process must be carried out in a way that makes a valid disclaimer so that you can handle all issues that come up.

When an inheritance is refused, there will be no responsibility of taxes regarding the inheritance. However, you no longer have a say of who will receive the inheritance. A bequest will pass to the next beneficiary that the will lists or in accordance with intestacy laws.

Why an Inheritance Would Be Refused

While refusing an inheritance is rare, there are some reasons why a refusal would be made.

  • No wanted Hassle if a property needs more repairs than what is wanted to be made.
  • Government aid is lost
  • Estate tax is avoided

Although the reasons above are common when inheritance is being disclaimed, there are many others as well. When it comes to the rules, the Internal Revenue Service states that in order for an inheritance to be refused, a disclaimer must be in writing and is stating your intent to refuse an inheritance through an irrevocable manner. When the disclaimer is submitted, it needs to be notarized, signed, and filed through probate and submitted to the will executor within a certain amount of time. With the time frame, the IRS sets at least nine months from the time of death. Or when the beneficiary that is disclaiming is a minor and they have turned 21.

When an inheritance has been accepted and a disclaimer is made after the fact, the disclaimer will be viewed by the IRS as invalid. Plus, a refusal must be made without having any interest in the inheritance and without discretion on the party who the disclaimer is for whether it is the spouse or any other party besides the disclaimer.

Your state laws will also need to be considered when a disclaimer is being submitted, which will differ from state to state.

When you have a good enough reason to refuse an inheritance, you should have all of your options weighed first. When you see that no other options exist, understand that  once you revoke your inheritance, it will be unable to be restored later. If you have any questions or concerns about inheritance, give us a call today.

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