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Am I Required to Accept an Inheritance?

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When a family member or close loved one passes away, family members typically start thinking about what they might inherit from the decedent’s estate. Likewise, when there is controversy or conflict over an estate, it is most often the result of two or more heirs disagreeing over the inheritance to which they feel they are entitled. What happens, however, if you do not want the inheritance left to you? Are you required to accept it? An Essex Junction estate planning attorney at Unsworth LaPlante, PLLC explains why you might not want to accept an inheritance and how to properly reject one.

Why Would I Not Want to Accept an Inheritance?

Who turns down a gift? There are several very good reasons why you might not want to accept (in legal terms “disclaim”) an inheritance, including:

  • Tax consequences. Some states directly tax an inheritance you receive. Even if the inheritance isn’t 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.
  • You are in serious debt 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 a 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.
  • Personal reasons. Maybe you had a contentious relationship with the decedent and you simply do not feel that you can accept the inheritance.
  • Real property is problematic.  Sometimes, real property simply isn’t worth it. If the property is run-down or isn’t 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 clean up or remediation may be extremely costly – particularly if the state or federal authorities oversee it.
  • Loss of 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.
  • It’s the right thing to do.  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 Disclaim an Inheritance?

Disclaiming an inheritance requires a written disclaimer. There are several important reasons why you should always consult with an experienced estate planning attorney if you are considering rejecting an 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.
  • 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.
  • You must disclaim your entire inheritance.
  • A disclaimer is irrevocable. Once you have disclaimed your inheritance you cannot interfere with what happens next.

Contact an Essex Junction Estate Planning Attorneys

For more information, please attend one of our upcoming FREE webinars. If you have questions or concerns about disclaiming an inheritance, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.

Stephen Unsworth
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