In the unfortunate event of a loved one passing away, it is possible that you may be named a Beneficiary within their Will, meaning you were selected to inherit some of the deceased’s assets, whether that be money, a house, property, a car, etc. It is especially likely that you could be named a Beneficiary if you are the child of the deceased. It is an incredible honor to be named as a Beneficiary within the Will of a loved one, as it is often the last act by the deceased to show how much they care for their loved ones. However, although it is a kind gesture, it is possible that you may decide you want to disclaim your inheritance.
Trust & Will, a leader in online estate planning services, knows that there are situations in which you may find it important to disclaim your inheritance from your loved one and need to know how to go about doing it. We have put this article together to cover reasons why you may want to disclaim your inheritance, as well as how long you have to disclaim an inheritance, and what will happen when you do.
Keep reading to learn the following:
Why would you disclaim your inheritance?
There are many reasons why someone may consider disclaiming their inheritance. The following are just a few examples of instances where this situation may arise.
The Inheritance would Increase Your Tax Bracket
Occasionally, if your parents or grandparents left you a significant enough amount of assets, whether that be through money or other assets such as cars, the tax bracket you are a part of can increase. While this may be okay to some, others may feel that the burden of the larger tax bracket is not practical for them. When this is the case, people may choose to instead disclaim either all of their inheritance or only a portion so as not to increase their tax bracket.
You Feel Another Sibling Would Benefit More
Often, inheritance is split between all siblings within the family. When this occurs, each sibling only receives a portion of the larger inheritance. It is possible that at the time of your parents passing, you feel that one sibling could benefit more from an inheritance than you, and therefore could use a larger portion. For example, your sibling could have significant debt, whether that be from student loans or medical bills, or perhaps your sibling has a much larger family than you and could use the additional support. In these situations, you may choose to disclaim your inheritance in order to give your sibling an additional share.
You Do Not Need the Inheritance
Another reason someone may choose to disclaim their inheritance is when they feel they are comfortable with their current financial status and do not feel that they need any more money or assets. It is possible that you may believe any additional money you acquired may go to waste or you would not have any purpose for it, as all your needs are currently met. In this situation, you may decide the inheritance would be better suited to go to another.
You Feel the Wishes of the Deceased Would Be Better Met
It is possible that in certain circumstances, disclaiming your inheritance would actually better meet the wishes of the deceased than accepting the inheritance granted to you. Perhaps you were able to speak with your parents or grandparents before their passing and they explained to you that they had wanted to change their Will but did not have the time to do so before it was too late. You may choose to then try and uphold their wishes by disclaiming your inheritance.
How do I disclaim an inheritance?
In order to disclaim an inheritance, you will need to write a Disclaimer, which states that you are disclaiming your inheritance in writing. Within your Disclaimer, you will need to explain what is being disclaimed, whether it is only part of your inheritance or all of it, as well as sign the document to make it legal. Once this disclaimer is submitted, you will no longer receive any benefits from the inheritance you disclaimed.
How long do you have to disclaim your inheritance?
If you choose to disclaim your inheritance for any reason, you will need to do so within nine months of the deceased’s passing. The only exception to this rule is in the case of minors who must wait until they reach legal adulthood to disclaim an inheritance and will then have nine months to disclaim from that point forward.
What will happen when you disclaim an inheritance?
When you disclaim an inheritance, you will not receive the inheritance and it will instead pass onto the next Beneficiary. It is important to note that when you disclaim an inheritance, you do not get to choose who the Beneficiary will be in your place. Whoever is the next Beneficiary after you will receive your inheritance in place of you.
Deciding whether disclaiming your inheritance is right for you is not a decision you will want to make lightly, and can be a tough call to make. Additionally, it can also be challenging to decide who of your loved ones you want to leave the inheritance to, but the creation of your Will and putting down in legal writing who you want to be your Beneficiaries does not have to be. With Trust & Will’s online estate planning services, it is easier than ever before to complete an Estate Plan—you don’t even have to leave your couch! With Trust & Will, you can complete everything online from your Will to your Trust-Based Estate Plan to your Nomination of Guardianship documents. If you are unsure where to start, we even offer a free online quiz to point you in the right direction.
So, what are you waiting for? Visit our site today to take the quiz and get started!
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