Can You Reject an Inheritance You Don’t Want?

Communication is absolutely essential to quality estate planning. That includes both sharing of information between client and planner, as well as the client being open and honest with their family about their wishes. Some might want to avoid difficult conversations about inheritances by keeping silent and allowing family members to find out only after they are gone. But this opens up the door to potential feuding and costly legal challenge. The goal of proper planning is to make transfers as seamless and efficient as possible, and meeting that goal requires others to know what to expect when the time comes.

Most of the time, unwelcome inheritance surprises come in the form of not getting what you expected to receive. Many adult children are surprised when a parent leaves assets to someone else or does not distribute equally between siblings. But the opposite may also be true. You may receive an item that you do not want. For a variety of reasons, not all gifts may be welcome. There are steps that can be taken to disclaim a gift that is part of an inheritance but they are often confusing.

Thanks, But No Thanks
As referenced in a NJ News article on the subject, both state and federal law set rules that must be followed to disclaim a gift. Failing to do this properly may result in various complications, including tax issues. Generally, however, a disclaimer must be made in writing and be irrevocable. The disclaimer cannot be made if you already accepted some benefit from the gift. The disclaimer must be received by the executor in a timely manner
There are many other complications that come with disclaiming, however. If the disclaimed gift reverts back to the estate afterwards (and the same person is set to inherit part of the estate generally), then the individual will need to disclaim the gift yet again as a portion of the inherited remainder.

Importantly, the above rules roughly describe the process when a gift is transferred via a will. Options may be far different if alternative methods are used–like trusts. At the end of the day, it is absolutely critical not to make decisions about these matters without first visiting with an estate planning attorney and other professionals to understand the implications and the exact rules that must be followed. At the same time, it is helpful to avoid this possibility altogether by having discussions well-beforehand so that a plan can be crafted whereby heirs know what they are getting and have accepted it.