Usually, a phone call or letter indicating that you have been left an inheritance is welcomed. However, there are situations in which you might not want to accept an inheritance. If you find yourself in that situation, can you reject an inheritance? The answer is ‘’yes”, you can reject and inheritance, but it is more complicated than simply telling the executor you don’t want it.
There are an endless number of reasons why someone might want to reject, or disclaim, an inheritance. The most common are tax reasons, and because accepting the inheritance will cost more than it is worth.
For example, imagine that your spouse died and left you all of his/her assets. No federal gift and estate tax will be due because a decedent may leave an unlimited amount of assets to a spouse without incurring a tax obligation pursuant to the unlimited marital deduction, under most circumstances. Those assets, however, combined with your own assets, will put your estate well over the lifetime limit for gift and estate tax purposes. As a result, you will lose 40 percent of the excess when you die. In that case, it might make more sense to disclaim the inheritance and let it pass directly to the next beneficiaries in line, normally your children. Obviously, this is a situation where you need to confer with your estate planning attorney before deciding how to proceed. However, it is a common reason why an inheritance is rejected.
The other common reason is found in the assets that make up the inheritance itself. Imagine, for example, that your long lost uncle Bob left you his home in his Last Will and Testament, or maybe you are his only living heir if no Will was left behind. At any rate, uncle Bob spent the last several years of his life in a retirement home so his actual home has fallen into disrepair and the costs involved in fixing it up will far outweigh the value of the home. Therefore, you prefer to reject the inheritance.
Regardless of the reason, if you do not want the inheritance you need to formally disclaim or reject it. This must be done in writing and must explain in detail the assets involved. You will need to sign the document in front of witnesses and/or a notary public and deliver the document to the personal representative for the estate.
If you have additional questions or concerns about rejecting and inheritance contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.