Who wouldn’t be happy to accept an inheritance? Believe it or not, there are still some good-hearted folks who would rather NOT inherit their share of an estate.
Let’s say you might be financially set and want to turn down all or part of your share of an inheritance, so it passes to your financially struggling siblings. If you choose to exercise your right to disclaim an inheritance, the assets bypass you and go to the next beneficiary or beneficiaries, in line as specified by the decedent. (In their will or trust document.)
At this time, I would be remiss if I didn’t point out that if you don’t at least have a will when you die, there are rules the state has set up that will be followed in distributing your estate. You may not like who the state says gets to inherit your stuff, so at least have a will prepared!
When choosing NOT to inherit something, there is a process that MUST be followed in order to avoid making a gift, which would require filing a Gift Tax Return and reducing your life-time gift exclusion. Currently the life-time gift exclusion amount is set at $12.06 million, but it is scheduled to drop to $5 million in 2026.
To refuse your share of an inheritance you must make a “Qualified Disclaimer.” There are certain rules that must be followed for this to be acceptable.
• It must be in writing and signed by the disclaiming party (Uh, that would be you).
• It identifies the property or interest in property that is being disclaimed. Be specific enough to make a clear definition here. At this point, I should point out that to do a “Qualified Disclaimer” correctly, you should have an attorney involved. They have the “gift” of writing legalese that us “normal” folks have no clue how to do. But heaven help you if you do it yourself, end up not doing it correctly and make a mess of things.
• It must be delivered to the person or entity charged with the obligation of transferring the assets of the estate. Usually, an estate executor, or a Trustee of a Trust. Make sure you obtain proof of this happening. Once again, this is where attorneys really come in handy. They are just full of all kinds of ideas for how to do this important step.
• It must be created less than nine months after the date the property was transferred or nine months after a minor disclaimant reaches age 21.
It is important to know that you can’t change course after you’ve disclaimed the property. And, you can NOT disclaim property once it has been accepted. So if you get a check, don’t cash it!
So, now you know that there is a way to say “no thank you” to an inheritance.
Have you heard? Deuteronomy 22:4 says, “You shall not see your brother’s donkey or his ox fallen down by the way, and hide yourself from them. You shall surely help him to life them up again.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com. Also on Facebook.
