Most people think that when they receive an inheritance they have to take it. However, you have no legal obligation to take any inheritance. You can actually refuse it. The legal term for doing so is called a “Disclaimer.” When you disclaim an inheritance, the law assumes for purposes of distributing the disclaimed property that you have passed away. That means that the inheritance you would have received will go to your heirs.
There are many reasons to disclaim an inheritance. The most common reasons have to do with very large estates and very small estates. In a small estate, real property often comes with a mortgage. If you cannot afford the mortgage or simply do not want the property, then you can disclaim it. It might be a good idea to have your heirs disclaim the property as well. In a large estate, the property is subject to the estate tax. If you plan on leaving it to your children, it will be subject to the estate tax again. You can get around this double-dipping of the estate tax by disclaiming the inheritance. It will go to your children now and the estate tax will only have one bite at it.
Before taking an inheritance talk to an attorney to see if disclaiming it might be better under the circumstances.
Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.