I have written about a deadbeat dad who claimed part of his deceased son’s estate, even though he had not been part of his son’s life for more than thirty years. The potential of inheriting money often brings distant and estranged relatives out of the woodwork, clamoring for as much of an estate’s assets as possible.
But not always.
I once got a note from someone whose estranged father had died intestate. The deceased father was single, which meant that his children would inherit the entire estate. But they wanted nothing to do with their dad or anything he owned. “Do we have to take it?” the writer asked.
There is no law requiring a person to accept an inheritance. If someone doesn’t want the gift, it is possible to disclaim it. Although most people can’t imagine disclaiming an inheritance, there are sometimes good reasons to do so.
Often, disclaimers are made for tax reasons. For example, a wealthy surviving spouse who inherits her husband’s entire estate outright can disclaim assets up to the exemption amount. This will allow those assets to pass to the couple’s children free of estate tax rather than being included in her estate and taxed upon her death.
Or someone who inherits a dilapidated piece of real estate could disclaim the gift to avoid incurring the expense associated with repairing and maintaining the property.
Disclaiming an inheritance is not as easy as just saying you don’t want it. To be valid, a disclaimer of an interest created by virtue of the intestacy statutes or a Will must:
- Be in writing;
- Declare the refusal to accept an interest in or power over the property;
- Describe the interest or power disclaimed;
- Be signed by the person making a disclaimer;
- And must be delivered to the estate’s personal representative of the decedent’s estate, or if no personal representative is serving, be filed in the official public records of any county in which the decedent was domiciled on the date of death or owned real property.
Prior to September 1, 2015, a disclaimer had to made within nine months after the decedent’s death or within nine months after a revocable transfer becomes irrevocable. This is still necessary if the motive for the disclaimer is to avoid gift taxes.
Under the new statutes, a disclaimer may be made at any time before an interest in the property has been accepted. A disclaimer of an interest in property is barred if any of the following occurs before the disclaimer becomes effective:
- The person seeking to disclaim takes possession of the interest or exercises dominion and control over the interest
- The person seeking to disclaim voluntarily assigns, conveys, encumbers, pledges, or transfers the interest sought to be disclaimed or contracts to do so; or
- the interest sought to be disclaimed is sold under a judicial sale.
The effect of the disclaimer is that the property will pass as though the person disclaiming the property predeceased the decedent. The person making the disclaimer cannot direct how the disclaimed property will be distributed.