When most people make an estate plan, they do so with the thought that the assets they leave behind will be appreciated by their beneficiaries. In some situations, however, the decedent’s heirs don’t want to claim the property they have received. Although it might be tough to imagine why anyone would refuse an inheritance, this scenario happens on occasion.
Refusing an inheritance is referred to as a “disclaimer.” This can happen with a trust, a last will and testament, or in cases of intestate succession, which is when property is distributed according to state statute because the decedent did not have a will.
Disclaimers are one important reason why you should select an alternative beneficiary in your will and other estate documents.
Why Do Beneficiaries Turn Down an Inheritance?
There are several reasons why a beneficiary might decide to refuse an inheritance. Some of the more common reasons include the following:
- Real estate that is in bad physical shape or laden with tax debt. The expense associated with paying taxes or performing repairs and maintenance might be a financial hardship for the beneficiary.
- The beneficiary has filed or will file bankruptcy and might lose the property or gift to creditors.
- The beneficiary is considering a divorce and wants to keep the property in the family.
- The beneficiary has considerable personal wealth and prefers someone else to receive the inheritance.
- The inheritance does not appeal to the beneficiary and may even create a burden (example: a substantial collection of porcelain dolls given to someone with an aversion to dolls).
Before you create any estate planning documents, speak to your intended beneficiaries about any bequests you intend to make. This is particularly important if you plan to gift a large piece of property or substantial asset to a beneficiary. In some situations, the intended recipient may lack the resources or time to manage the inheritance. In other situations, the tax consequences of a gift leave the beneficiary no choice but to disclaim it.
What Happens When a Beneficiary Disclaims an Inheritance?
When a beneficiary refuses an inheritance, it goes to any alternative beneficiary named in the will, trust, or other document. When the estate document does not name an alternate, the inheritance is distributed according to the intestacy statute.
Roseville, California Estate Planning Attorneys
Our California estate planning and probate attorneys can help you create a comprehensive estate plan that brings peace of mind. Call Yee Law Group, PC, PC today at (916) 599-7297 to speak to an experienced estate planning lawyer about your needs and goals.
This website has been prepared by Yee Law Group, PC, PC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.