When the average person thinks of an inheritance, they think of it as winning the lottery. But when you are actually faced with accepting an inheritance, you may find that it makes more sense to decline the inheritance or transfer it to someone else. To decline an inheritance, you need to file a disclaimer after the will is read. But why would people file a disclaimer to refuse an inheritance?
Some of the reasons that people refuse an inheritance are based on their current situation, while other reasons deal with long-term implications. If you are ever named as a beneficiary in a will, it does help to know that you have options if you are handed an inheritance that you don’t want.
Not Interested In Real Estate
In some cases, people will file a disclaimer on an inheritance because that inheritance consists of real estate. While it is easy enough to sell a house as long as the house is in good condition, selling an empty lot is not nearly as simple. If you inherit an empty lot, you also inherit the maintenance costs and the tax bills that are associated with the property.
It would seem that selling the plot of land would be the simple solution, but plots don’t sell as readily as developed property. You could be stuck with your plot of land for years, and that will cost you a lot of money. If you are given a plot of land as an inheritance, then you should immediately do research on that land to see if you want to keep it or file a disclaimer.
Estate Tax Implications
An inheritance brings tax implications of its own, but some people look beyond their short-term problems and consider the long-term picture of taking on a large inheritance. Some people file a disclaimer on an inheritance because they are afraid that the inheritance will trigger significant estate taxes on their own estate when they pass away.
It is important to remember that the estate tax threshold is several million dollars and your new inheritance would need to be substantial to cause your own heirs any financial issues. Before you disclaim your inheritance, you should discuss your options with your own attorney to see if your inheritance could cause headaches for your beneficiaries.
You can use a disclaimer to transfer inherited property without having to go through the process of taking ownership of the property and then transferring it to someone else. For example, if your grandfather leaves you his home, you may not want the home because you are happy with the home you have. But you do know that your brother is in desperate need of a new home, and you would rather give the family home to your brother than sell it to a stranger. A disclaimer allows you to transfer ownership of the home to your brother in a smooth and simple way.
When people see movies and television shows that portray someone getting an inheritance, the general emotion conveyed is one of joy. But in the real world, an inheritance does not always make the beneficiary happy. In some cases, beneficiaries want to refuse their inheritance and they can do that by filing a disclaimer to waive their right to whatever has been left in their name.