Not everyone is happy to receive an inheritance. Depending on your personal situation, you might elect to refuse or disclaim a bequest made to you by a loved one for any number of reasons. If you’re younger, the windfall might affect your eligibility for student aid, even if it's not payable to you immediately. If you’re older, it might prevent you from qualifying for Medicaid. Further, if you're already wealthy, an inheritance will increase your estate's value, which could mean your own estate will end up paying additional federal estate taxes when you die. The law recognizes these issues sometimes occur and you usually do not have to accept an inheritance if you don’t want to do so.
Legally Refusing a Bequest
A disclaimer must usually be in writing and, in some states, you may have to have your disclaimer notarized. Some states provide specific forms you must use. Simply advising the estate’s executor that you don’t want your inheritance is rarely sufficient. You must usually disclaim your inheritance before you’ve accepted any portion of it. For example, if it produces income and you accept that income, you usually can't disclaim the asset later. Statutes of limitation may apply as well. In some states, you must decline the bequest within nine months or before estate taxes are due. The laws for disclaiming an inheritance vary from state to state so if this is something you think you might want to do, you should speak with an attorney before taking decisive action.
Effect on the Estate
If the decedent left a will and named you as a beneficiary and you decline the bequest, most states treat the event the same as if you had predeceased him. The executor must probate the will as if you had died and were no longer available to accept your inheritance. Your bequest will then revert back to the estate.
Terms of the Will
After your inheritance reverts to the estate, who receives it in your stead depends on the terms of the will. Most wills include language detailing what becomes of your bequest if you’re no longer alive to receive it. Because the law views a disclaimer as if you had died, your inheritance would go to the person or persons the decedent directed to receive it in the event of your death. This might be your children, your spouse, a charity or a distant relative. In most cases, you can’t disclaim an inheritance and dictate to whom you want it to go instead.
When an individual dies without leaving a will, his state’s intestacy laws take over. They include a line of succession based on the degree of relationship between the decedent and his heirs and dictate to whom his assets should go first. In most states, spouses are first in line to inherit, followed by children, parents, siblings and grandparents. If you receive an inheritance through intestate succession and you disclaim it, it automatically goes to the next person in line. If your parent dies with an estate valued at $100,000 and you want to disclaim it, the $100,000 would go to your siblings, if you have any, with each receiving an equal portion. If you don’t have siblings, the inheritance would revert to your parent’s parents and if they are not living, to your aunts and uncles and their descendants. However, this might not hold true if your other parent is still alive because she would be in line to receive most, if not all, of your deceased parent’s estate before you're entitled to anything.
Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years. She specializes in family law and estate law and has mediated family custody issues.