Generally speaking, people look forward to inheriting money, real estate or other assets from their parents or grandparents. However, there are scenarios in which it may make more sense to decline the opportunity to receive ownership of a bank account, brokerage account or Texas home. Take a look at the process of disclaiming an inheritance.
The rules for disclaiming an inheritance
If you wish to waive your rights as a beneficiary, you must submit a written statement declaring this to be the case. This statement must be received no more than nine months after the original owner of a given asset passes away. Finally, you must acknowledge that you have no say over who the inheritance goes to after the disclaimer has been received.
The tax implications of refusing an inheritance
Generally speaking, declining to receive an inherited asset is the same as not owning it at all. If the original owner of the asset named a contingent beneficiary, that person would receive an item on your behalf. State law would determine who would receive an item if an individual failed to name an alternate beneficiary.
It’s important to note that failing to properly decline an inherited item might result in a higher tax bill for the eventual beneficiary. An attorney who has experience with will and probate law might be able to provide more insight into what happens after refusing to take ownership of a deceased person’s property.
Ideally, you’ll have an estate planning attorney review your will, trust or other estate plan documents on a regular basis. This may minimize the odds that you fail to name alternate beneficiaries, fund a trust or take other steps that could render your estate plan invalid or harder to implement.