Stories about heirs fighting over an estate are common, whether the estate is worth millions of dollars or consists of nothing more than the family home. What happens though, if an heir doesn’t want his/her inheritance? Can you reject an inheritance? Your first thought when hearing that question is likely something along the lines of, why would someone ever want to reject an inheritance. It does happen though, and sometimes for good reason.
Rejecting an Inheritance for Emotional Reasons
Turning down, or rejecting, an inheritance can occur for practical and/or emotional reasons. Occasionally, an estranged adult child is informed that his/her parent died and that the child stands to inherit from the estate. However, the heir might not want the inheritance as a result of the relationship, or lack thereof, he/she had with the parent. In this case, the rejection is purely an emotional response.
Rejecting an Inheritance for Practical Reasons
There are also practical reasons why you might want to reject or disclaim and inheritance. One common reason to reject all or part of an inheritance is based on the tax implications of accepting. This occurs most often when someone dies intestate with a moderate to large estate. In other words, they die without leaving a valid Last Will and Testament behind. In that case, all, or a large portion, of the estate will likely pass to a surviving spouse. That could result in overfunding the surviving spouse’s estate. A large portion of the spouse’s estate could then be lost to federal gift and estate taxes upon his/her death. In that scenario, disclaiming some, or all, of the inheritance would be rational. Doing so may allow the inheritance to pass directly to other heirs, usually the couple’s children, instead.
Rejecting an Inheritance for Financial Reasons
Yet another common reason to reject an inheritance is the simple fact that accepting it may cost the heir more than its worth. Imagine that your long lost aunt left you her home in her Will; exciting! However, there’s a catch. The home is in desperate need of extensive, and costly, repairs. Or worse, the property is seriously delinquent on tax obligations. You may not have the necessary resources to complete the repairs or pay the taxes due on the property. Instead, it may make more sense for you to reject the inheritance and let it pass to someone else who has the funds to afford the gift.
If you do decide to reject an inheritance, it isn’t as simple as saying you don’t want it. You will likely need to officially indicate your intent to reject the inheritance in writing. Then, you will need to deliver it to the Executor or Personal Representative of the estate. If you have questions or concerns, an experienced Texas estate planning attorney can assist you in this process. Feel free to contact the The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.