Even the best estate planners aren't psychic. When you inherit money or property, your financial life may not be what the deceased expected when writing the will. Maybe your baby brother needs the money more. Perhaps you can't afford property tax if you inherit the house. You can legally relinquish some or all of your inheritance. Although generalizations can be made about the overall process, be sure to know your local laws, because laws vary among states.
Research the Will
Study the terms of the will and the value of what you inherit. Learn who inherits the property if you disclaim it. Once you disclaim property, there's no way to change your mind and get the property back, so be clear what you're giving up before you go any further. Once you disclaim an inheritance, legally it's as if you never owned it. If you inherited and then gave it away, on the other hand, you might have to pay gift tax.
When you relinquish property, you don't get any say in who inherits in your place. If you want to control who gets the inheritance, you must accept it and give it to that person. If you relinquish the property and the deceased didn't name a backup heir, the court will apply state law to decide who inherits.
Contact the Estate
Write a letter to the estate's executor, trustee or administrator. The letter should state who has left you the inheritance. The letter should also state clearly that you want to disclaim your inheritance -- or, if you intend to make a partial disclaimer, the letter must specify exactly which parts of the bequest you're giving up. Be sure to sign the letter.
Send the letter to the executor, trustee or administrator within the time specified by state law. For example, in California, you must disclaim your inheritance within nine months of the date the person died, or within nine months of any other event that caused you to inherit the bequest.
Follow Up
Follow any instructions or provide any additional paperwork that the executor, trustee or administrator asks you to complete. If you disclaim real estate, you may have to notarize and record the disclaimer in the county where the property sits. Again, familiarize yourself with your local laws.
You can disclaim part of your inheritance, but only if it's something you can separate from the remaining bequest. If you inherit a Van Gogh painting, for example, you can't disclaim half of it. It's also important to note that you can't give up property once you receive a financial benefit from it. The IRS turned down one widow's disclaimer because she'd used part of the inheritance to pay her bills, even though she eventually paid the estate back. Relinquishing an inheritance in return for a kickback from the next heir in line is also unacceptable.
References
Resources
Tips
- If you disclaim real estate, you may have to notarize and record the disclaimer in the county where the property sits. Again, familiarize yourself with your local laws.
- You can disclaim part of your inheritance, but only if it's something you can separate from the remaining bequest. If you inherit a Van Gogh painting, for example, you can't disclaim half of it.
- Once you disclaim an inheritance, legally it's as if you never owned it. If you inherited and then gave it away, on the other hand, you might have to pay gift tax.
Warnings
- When you relinquish property, you don't get any say in who inherits in your place. If you want to control who gets the inheritance, you must accept it and give it to that person. If you relinquish the property and the deceased didn't name a back-up heir, the court will apply state law to decide who inherits.
- You can't give up property once you receive a financial benefit from it. The IRS turned down one widow's disclaimer because she'd used part of the inheritance to pay her bills, even though she eventually paid the estate back. Relinquishing an inheritance in return for a kickback from the next heir in line is also unacceptable.
Writer Bio
A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.