To reject an inheritance, you need to have received no benefit from it, nor can you in the future.
The disclaimer is an official legal document that must be notarized and filed with the probate court within 9 months of the person's passing.
The assets will then pass to the next named beneficiary, or according to state law if there isn't one.
Be aware that this could have tax or financial implications for the next person in line.
Inheritances can be a tricky topic. The ones who leave them to us were not always good presences in our lives. And receiving their property or money could pose a burden on your emotional health that you didn’t ask for. This situation is more common than you might imagine, and you are not alone in wondering how to deal with it.
When someone in your family passes away, or someone else you were once close with, it’s always difficult, no matter how far apart you had drifted. But those strained relationships, ongoing disagreements, bad blood, and even total estrangements can mean your grief becomes mixed with confusion, anger, and maybe even the desire not to let their death have an impact on you at all.
If you then find out that you’ve inherited a large sum of money or a piece of property from the person, it’s normal to feel resistance to the idea of taking ownership of something so filled with complicated sentiments.
So what should you do, if you inherit property from someone you had a fraught relationship with? Can you choose to accept the bequest without inviting any toxic emotions back into your life? Or maybe you should simply decline?
One way to cope in a situation like this is to take the negative and turn it into a positive by accepting the assets and using them toward something that feels right to you. By investing the money in something that works toward your own healing, the inheritance might feel less like a stain and more like a way for you to continue forward.
Perhaps you suffered some trauma at the hands of this person and have since gotten involved in local charities or organizations that work with people who have gone through similar experiences. Chances are they could benefit from a donation. Or maybe you associate this person with abandonment, and now you can use the inheritance to set your own family up for future success, such as by investing it in a college fund.
If you do choose to accept the inheritance, what’s key is that you don’t continue to associate it with the burden of negative feelings. You’ll most likely have to do some emotional work (with either a therapist or another confidant) to make sure you find your peace with it.
Investing your inheritance in something that works toward your own healing might feel less like a stain and more like a way for you to continue forward.
Another thing to keep in mind when choosing this course of action is how you’ll physically be claiming your inheritance. Will you need to come in contact with other people with whom you have a strained relationship? Is it going to be a long road that leaves you too drained to cope with the other emotions you’re feeling? Can you claim the assets without overburdening yourself? You might not want to put yourself through any extra hardship, and that’s OK. If it is going to be too much, you can certainly consider disclaiming the assets instead.
If you can think of no positive way to spin your inheritance, or you don’t think you want to deal with the responsibilities that might come with accepting it, it’s possible to refuse all or part of it (legally referred to as “disclaiming”).
It’s a process that, for tax purposes, needs to be followed exactly—otherwise you could be liable for taxes on assets you never wanted in the first place.
When you are the primary beneficiary of an asset and you disclaim it, the asset gets passed to the next beneficiary named by the person who passed away. If no secondary beneficiary was named, the asset will pass to another heir as determined by state law.
Be aware that this could have tax and other financial consequences for the new beneficiary of the asset, so make sure you take this into consideration. You don’t want to saddle another family member with an unexpected obligation. Speak to an estate lawyer or financial advisor if you are at all in doubt of what the outcome will be.
To officially reject the inheritance, you’ll need to file a signed and notarized written disclaimer with the probate court that clearly states your intent to refuse the bequest. You need to swear that you receive no benefit from the inheritance before or after you refuse it; otherwise the IRS could deem your disclaimer invalid.
This process needs to happen fairly quickly. The IRS mandates that it must take place within nine months after the date of death (there are exceptions if the beneficiary is a minor, however).
There also might be specific requirements for this process in your state, so be sure to check local laws, and again, consider getting advice from an estate lawyer or financial advisor before embarking on this path.
It is important to note that once you file the disclaimer with the court, this decision is permanent, You don’t have any say in what happens to an inheritance after you disclaim it. That is completely up to the probate court and the person who is next in line to receive it.
No matter your reason for grappling with this difficult question, there are undoubtedly lots of factors that will go into your decision. Make sure you weigh your options carefully. Lean on friends, family, and other confidants. Seek out expert and professional opinions. And, last but not least, take care of yourself. Grief is multifaceted, and just because you had a troubled relationship with the person who passed away, that doesn’t mean their loss shouldn’t affect you. Allow yourself to feel whatever you are feeling, and process those emotions however you have to ●
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