Believe it or not, there are reasons why people occasionally ask about refusing an inheritance. Sometimes the inheritance is of property that is undesirable or it is an asset that is of no value or one that would be costly to maintain. There are individuals who, for religious or philosophical reasons, do not wish to acquire or increase their wealth. Sometimes one’s reason for refusing an inheritance concerns a desire to benefit persons who will receive it instead, i.e. “My children will get it and I would prefer for them to have it.” There may be tax implications in accepting the inheritance and disclaiming property could be part of the beneficiary’s own estate planning.
An estate disclaimer or renunciation is a mechanism for relinquishing one’s inheritance. Disclaimers are very particularized legal documents. To be valid and binding, they must be in writing, must state the name of the deceased person and the identity of the disclaiming heir and they must conform with both state and federal law. The document should state that it is being freely given, without coercion, and typically it should specify that the heir has not received compensation or other benefits for agreeing to disclaim. The executor of the will must receive a copy of the disclaimer.
Typically, a disclaimer must be filed with the Court that has jurisdiction over the estate within nine months of the decedent’s death. These time constraints are predicated upon the time within which federal and state estate taxes are due and payable. Depending upon who is disclaiming an inheritance or bequest and what the value of the disclaimed asset is, the disclaimer may affect the calculation of tax liability.
One can disclaim all benefits to which he or she may be entitled, only one item or a specified class of benefits, i.e. all furniture. After the disclaimer is filed, it is the executor’s obligation to distribute the disclaimed assets. One is not permitted to specify to whom those disclaimed assets will pass. Ordinarily, the will names the beneficiary(ies) and then indicates who will receive the asset or assets if the named beneficiary(ies) disclaims or predeceases the testator.
If you or a loved one has questions concerning this issue, you should seek the assistance of experienced counsel. Call Berwitz & DiTata LLP for help.