Is there such a thing as an inheritance that you wouldn’t want?
Inheriting assets is typically something we feel grateful for, but not all inheritances are created equal. In fact, in this guide, we’ll introduce 5 of the worst assets to inherit. You might find yourself saying, “thank you, next.” That also begs the question, can you refuse an inheritance if it contains an asset that you absolutely do not want? Keep reading and you just might find out.
1. Timeshares
Do your parents own a timeshare?
Timeshares are contracts through which the participant agrees to rent out the same vacation property once every year. They may be preferable for someone who wants to vacation in the same, reliable location and amenities each year, over the alternative of booking a different vacation or buying a vacation property.
Timeshares can be a positive experience for many individuals, but they should be careful about passing them on to their loved ones. This is because timeshares are long-term contracts that are notoriously difficult to get rid of.
If you inherit a timeshare, you might find yourself bound to ongoing contract costs that continue to increase. Some sellers will strongly encourage buyers to put their young loved ones on the contract for this reason.
Luckily, you can choose to disclaim the timeshare if you don’t want it.
2. Vacation properties
Vacation properties can create the perfect storm for family infighting. When multiple children inherit a single vacation property, the fighting often begins.
They may have disagreements over use, financial responsibility, making repairs, and buying one another out of their share.
Even if a vacation property inheritance doesn’t ruffle any feathers, they still come with significant expenses to shoulder. Examples include maintenance, property taxes, HOA fees, insurance, and any outstanding mortgage payments.
The cost and trouble of maintaining the vacation property could prove to exceed the value of the vacation property.
If your parents have a vacation property, you may want to consult with them and your siblings to come up with a game plan. If everyone would like to keep the vacation property in the family, perhaps you can sign a written agreement that lays out the rights and responsibilities of each heir after they receive their inheritance.
If no one is interested in keeping and maintaining the vacation home, then perhaps your parents will sell the property so they can leave liquid assets instead. Although capital gains tax may be owed, it may be worth saving everyone from headaches and arguments.
3. Guns
Guns are already a polarizing topic to begin with, but inheriting them can present a number of issues. This type of property cannot be given to another individual without the proper permits or registration. The rules regarding firearms vary by state to state.
For instance, in New York, an Executor of a deceased person’s estate can only possess the guns for up to 15 days without incurring any criminal liability. However, probating a will likely takes much longer than that. Instead, the heir or the Executor may need to contact law enforcement to store and inventory the firearms during the probate process. The police must pick them up, as they also cannot legally transport firearms themselves. Firearms that weren’t property registered by the original owner may not even be able to be passed down legally and may have to be abandoned.
This example highlights just how much trouble inheriting firearms can be. Not only does it create legal issues for heirs, it can also put the estate Executor in a sticky situation where law enforcement has to get involved.
Families who would like to keep firearms as a part of their legacy should plan ahead as much as possible. They may want to make sure that the heirs obtain the proper permits and registration so that they can legally accept the property. State laws and resources regarding firearms should be consulted.
Alternatively, families can consider working with a firearms dealer to liquidate the inheritance instead. Regardless of the decision made, safety should always be the top priority.
4. Collectibles
Valuable collectibles such as artwork, antiques, or rare collections of seashells can bring a family much enjoyment. As an heir, you may be very happy to inherit your loved ones’ collection that was curated carefully over time. Further, the capital gains tax rate on collectibles is 28 percent, much higher than the 20 percent on other types of investments. As an heir, you receive a step-up-in-basis, meaning that you can sell the collectibles tax-free after you inherit them.
However, inheriting collectibles can still cause issues. First, you might not even know that something bestowed to you is of any value. Some collectibles are easy to overlook, or even hard to find if they’ve been stored or hidden. Your loved one would ideally have clued you into any secret hiding spots before they passed away. That way, you won’t accidentally throw away precious gems that were sewn into cushions. (Stranger things have happened.)
Another issue is that collectibles can be difficult to value. Although they may have been valuable at the time of purchase, or provide plenty of pride or sentimental value, getting items appraised after you inherit them could prove tricky. A dealer could try to take you for a ride, or perhaps the once-coveted item no longer holds any value.
If you do inherit any collectibles, be sure to search for an appraiser or dealer with a good reputation.
5. Physical property with sentimental value
Sentimental items can also serve as a trigger point for emotional family members. Arguments over sentimental property left behind by Mom or Dad aren’t uncommon.
“Who’s going to get Dad’s record player?”
“Who’s going to get Mom’s wedding ring?”
“Who’s going to get Grandma’s favorite teacup?”
Although family infighting is unpleasant, it can happen when the environment is emotionally charged and no clear or fair solutions are present. During a time of grief, the comfort of a sentimental value left behind by a loved one can be priceless.
However, they are hard to divide, thus creating possible tension.
Unfortunately, the sentimental value often exceeds the monetary value as well. Antiques aren’t as popular as they used to be, and jewelry typically loses its value quickly upon purchase. The opposite can also be true. Items that seem negligible at first could turn out to be worth a lot.
If you are planning your estate, it is very helpful to plan out what should happen to your personal property ahead of time. You may choose to remove the burden from your loved ones by selling what you can during your lifetime, and leave behind cash instead. For items that simply cannot be sold, divide them as fairly as possible amongst your family members to help prevent in-fighting.
Can you refuse an inheritance?
There may come a time when you realize that a piece of your inheritance is just not something that you want. Perhaps you inherited one of the worst types of assets listed in this guide, or it’s not worth it to you to get into an emotionally-charged disagreement with a sibling.
Here, know that you are empowered with the option of refusing an inheritance. Gifts made from an estate can be refused for any reason, and you don’t have to explain yourself.
This process is called “disclaiming” a gift (a specific asset) or an inheritance (what you’ve been bequeathed in its entirety.) However, know that once you disclaim a gift, you do not get to control or influence its outcome. It will be passed on to the next beneficiary in line.
You’ll want to follow the correct procedure to make sure you never become the legal owner of the property. To do so, put your disclaimer in writing within 9 months of the decedent bequeathing you the property. (If you are a minor, you have 9 months from the day you turn 21.) Once written, deliver the disclaimer to the Executor or Trustee of the estate (the individual who has been appointed with administering the estate.)
Last but not least, be careful not to accept any benefit that could be provided or produced by the property you are disclaiming. It may be wise to consult a professional if you are choosing to disclaim property specifically for legal or tax purposes.
Update your estate plan to remove these items today
Inheriting assets often brings about mixed emotions. If you are receiving a gift from a close loved one, the gift is often received with a mixture of sadness and tenderness. While you are grieving your loss, you may be so happy to have something of sentimental value to remember them by.
On the other hand, there are some types of assets and property that can be an absolute headache to inherit. Some assets come with administrative or financial responsibility that you simply don’t want. Others just bring about drama and fighting with your siblings and relatives.
This should serve as a good learning experience that inspires action. It’s a great idea to sit down with your loved ones and discuss estate planning. Having open, honest, and transparent conversations about what you want or don’t want to inherit could encourage your loved ones to update their estate plans. Further, this may motivate you to update your own Estate Plan to remove undesirable assets and save your future generation from further grief.
For more tips, read our guide on how to avoid the dreaded family estate battle.
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