If you dream of inheriting a large estate from a long-lost uncle, the idea of rejecting an inheritance may sound bizarre to you. Most of the time, people are happy to inherit. However, there are exceptions. Sometimes, a beneficiary may not want to accept their part of an estate. Here’s what you need to know about rejecting an inheritance.
Why Would Anyone Want to Reject an Inheritance?
There are some legitimate reasons why a person might not want to accept an inheritance, ranging from financial motivations to emotional ones.
For example, maybe you’ve inherited a house. You live in another state, and you already have a home, so you don’t want the house for yourself. You also don’t have time to oversee the process of getting it ready to sell and putting it on the market. On top of all of that, you’re worried about the tax consequences. In Oregon, there’s no inheritance tax (although there is an estate tax), but you may still have to deal with property and capital gains taxes, not to mention the cost of insurance. Although you appreciate the sentiment, accepting the house seems like a big headache. You’d rather let someone else inherit the house. If you’re a joint beneficiary, you may want to let the other beneficiary claim full ownership.
Or maybe you’ve been named in a will, but you know the decedent planned to update their will to give the estate to someone else, and you agree that this decision was fair. Unfortunately, the will was never changed, and now you’re the legal heir of an estate you believe you have no moral right to. It’s also possible you had cut ties with the decedent, and for good reason, and you don’t want anything to do with their estate now.
Everyone’s situation is different. The point is that there can be good reasons for rejecting an inheritance.
Can You Reject an Inheritance?
Now that we’ve established why someone might want to reject an inheritance, it’s time to discuss whether it’s even possible.
Yes, you can reject an inheritance.
That being said, it’s important to go about it in the right way. If you want to disclaim an inheritance – that’s the technical term – you need to make sure you’re following state and federal procedures for doing so, and that all the necessary paperwork is filled out and delivered to the correct agencies. Otherwise, you may still be considered the legal owner of the assets, with all the tax and legal responsibilities involved in that.
Also, it’s important to note that if you disclaim an inheritance, you don’t have any say in what happens to it. The will and other estate planning documents, along with state law, will determine who receives the property. You will not get to determine this.
Alternatives to Disclaiming an Inheritance
Before you make the decision to disclaim an inheritance, you should consider your other options.
For example, if you simply don’t need the inheritance, you could decide to accept it and then donate it to the charity of your choice. This option could also provide you with a tax write off for charitable contributions. You could also gift the inheritance to another relative. It doesn’t have to be all or nothing, either. You could keep a portion of the inheritance and donate or gift the rest.
Do You Need Assistance?
Estate law can be complicated. Whether you’re thinking about rejecting or accepting an inheritance, it’s important to understand the implications and the proper procedures. An experienced estate planning attorney can guide you through your options. Contact Skinner Law for assistance.