Although most people wonât openly admit it, when a family member passes away they start contemplating a possible inheritance. That is not to say that they donât also grieve the loss of their loved one; however, the reality is that the decedentâs estate will go through probate and the assets will be distributed to the named beneficiaries. It is only natural to wonder if you are one of them if you are an immediate family member or close loved one of the decedent. What do you do though, if you donât want the inheritance? Can you reject an inheritance? The Lincolnshire estate planning lawyers at Hedeker Law. Ltd., explain how to legally reject an inheritance if you decide you do not want to accept it.
Reject an Inheritance? Why Would Anyone Do That?
The obvious question that must be answered first is âwhy would anyone want to reject an inheritance?â Isnât that effectively the same as throwing money away? There are actually several valid reasons why you might contemplate rejecting an inheritance, including:
- Debts or in bankruptcy — If you are already in serious financial trouble, and the inheritance would simply be lost to creditors without paying off all your debt, disclaiming can make sense. Be careful, however, if you are in the middle of bankruptcy at the time because disclaiming an inheritance while in the process of seeking bankruptcy protection can be problematic. If the Trustee finds out, he/she could go after the assets anyway and you could be in trouble for not divulging the inheritance.
- Problematic real property. Sometimes, real property simply isnât worth it. If the property is run-down or isnât very valuable, the taxes and upkeep could be more than the property is worth. Environmental concerns should also be considered. If the property is contaminated or full or mold, asbestos, or lead paint, the cleanup or remediation may be extremely costly â particularly if the state or federal authorities are in charge of it.
- Tax consequences â some states directly tax an inheritance you receive. Even if the inheritance isnât directly taxes, there may be tax consequences down the road to accepting the gift. If the next person in line to receive the inheritance is your child who is in a much lower tax bracket, and you plan to spend the money on him/her or leave it to him/her anyway, it can make more sense to disclaim and allow it to pass immediately.
- Jeopardizing assistance. If you are dependent on assistance programs such as Medicaid, Veterans Aid and Attendance, or Supplemental Security Income (SSI) an inheritance could disqualify you for those benefits until such time as your assets fall below the program limits once again.
- Moral considerations. Sometimes a parent, or other loved one, did not get around to making changes to their estate plan that you know they meant to make. For example, if your father recently remarried and you know he intended to include his new wife in his Will be never got around to doing it, disclaiming your inheritance might be the right thing to do.
How Do You Reject an Inheritance?
If you have decided, for whatever reason, to reject an inheritance, you must make that rejection official by executing a written disclaimer. If you are contemplating disclaiming an inheritance, you should consult with an experienced estate planning attorney for several reasons, including:
- It is crucial that you know with certainty who will inherit if you disclaim your inheritance.
- Certain actions you take could prevent you from being able to disclaim your inheritance.
- For a disclaimer to be valid, it must be in writing, contain the correct language, and be delivered to the right person within a specific amount of time.
- You must disclaim your entire inheritance.
- A disclaimer is irrevocable. Once you have disclaimed your inheritance you cannot interfere with what happens next.
Contact Lincolnshire Estate Planning Lawyers
For additional information, please download our FREE estate planning worksheet. If you have additional questions or concerns about rejecting an inheritance, contact the experienced Lincolnshire estate planning lawyers at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.