What happens if i refuse an inheritance

So what if you don't want an inheritance? This could have significant tax advantages. A variation factually is just a gift but Section of the Inheritance Tax Act provides that the terms of the variation will supersede the terms of a Will or intestacy provided certain conditions are met.

To be effective, the deed of variation must be executed by each of the relevant beneficiaries whose interests under the terms of the Will or intestacy are adversely affected by the variation. It is common for those benefiting under the variation as well as the personal representatives to be a party to the deed although this is not essential in many cases just so that they are aware of what is being done.

If the Will provides for minor or unborn beneficiaries then it would be impossible for all those adversely affected by the deed to be a party to the document. Any variation in those circumstances would need a court order and it would have to be shown that the deed is in the interests of the minor or unborn beneficiaries.

In terms of the tax benefits of a variation, current IHT and CGT legislation provides that as long as the deed is completed within two years from death and contains a valid election, the provisions of a variation are regarded as if they were those put in place by the deceased.

This provides a valuable and rare exception to the rule which prohibits gifts under a reservation from being outside the estate of the person making the gift. As Bill has a large estate of his own and is already thinking about his own IHT planning.

He has sufficient assets and income to meet all of his current and future income and capital requirements. He, therefore, decides to redirect his inheritance to his children to help them purchase properties. Bill would not be regarded as the person establishing the trust for IHT purposes but he would be for CGT and income tax purposes. This may be a small price to pay for the control which he desires. If you choose to do so, whatever assets you were meant to receive would be passed along to the next beneficiary in line.

And while it may seem strange to do so, there are some instances where it might be preferable for an heir or beneficiary to turn down an inheritance. With that in mind, you may choose to refuse an inheritance for any of the following reasons:. Say, for example, a relative leaves you their home, which is in need of extensive repairs or has expensive property taxes.

While most wills are upheld in courts, there are four main legal reasons that a will may be overturned. The executorship of a will comes with a lot of responsibilities and duties. Here are the basics so you'll know what to expect. Whether you're an executor, administrator, or heir to a probate estate, you probably want to know—just how long is this going to take?

Read on. Property Owners. Though a quitclaim deed is a common way to transfer ownership, it is possible to legally challenge one. Resources Estate Planning Estate Planning Basics How to Refuse an Inheritance How to Refuse an Inheritance Refusing an inheritance isn't complicated, but you must be sure you're making the right decision and also following proper procedure.

Reasons for Refusing an Inheritance If you think you'd never refuse an inheritance, you may want to consider various situations that might make sense, such as: Avoidance of estate taxes. If you want to keep your estate under a certain value to avoid federal estate taxes upon your own death, it may be smart to refuse an inheritance that would push you over that threshold.

Loss of eligibility for government aid. If accepting the inheritance would push your income over the qualifying amounts for programs such as student loans, Medicaid, or other government assistance, you may want to say no. Avoidance of hassle. If the asset in question is something like a run-down house that you'd rather not deal with, you may decide it's best to refuse. IRS Requirements for Refusing an Inheritance Under Internal Revenue Service IRS rules, to refuse an inheritance , you must execute a written disclaimer that clearly expresses your "irrevocable and unqualified" intent to refuse the bequest.

About the Author Michelle Kaminsky, Esq. Related Topics. Facebook Twitter. This portion of the site is for informational purposes only.