It’s always nice to know that someone was thinking about you as they prepared an estate plan. Knowing that someone cared enough for you to leave you an inheritance may make you smile. The problem is you aren’t sure whether you want what the person left you.
It’s not that you aren’t grateful; you just have reasons why accepting the inheritance isn’t what you want to do. Perhaps you believe another family member would benefit more from the inheritance, or you know you don’t have the financial resources to own the property.
Can you reject an inheritance?
The simple answer to this question is that, yes, you can reject an inheritance. However, you don’t have to decline all of your inheritance. Instead, you could accept only part of it. This is not as easy, though, as telling the executor of the estate that you decline it.
You will need to take certain steps in order to reject all or part of an inheritance to avoid any tax consequences associated with it since, if records indicate you ever owned the property, you will incur a tax liability. In order to disclaim the asset, you will need to follow the steps below as indicated by the IRS:
- You must document your qualified disclaimer in writing.
- You must provide an unqualified and irrevocable refusal of the assets.
- You must disclaim your inheritance within nine months of the individual’s death.
- Assets cannot indirectly pass to you.
- You cannot receive any benefit from any proceeds of the asset.
The effect of a qualified and appropriate disclaimer of your inheritance is that you never owned the assets left to you. If the decedent named a contingent beneficiary, the assets will then pass to that person in the same manner as they would if you had predeceased the individual who passed away and left you the inheritance. If there is no contingent beneficiary named, you cannot designate who will receive it in your stead.
Make sure it’s done right
If you do decide not to accept all or a portion of an inheritance, you will want to make sure that you disclaim it properly. Any mistake could result in incurring the financial ramifications you intended to avoid. For this reason, it would be wise to consult with a Texas attorney experienced in estate administration to help ensure you successfully decline your inheritance.