Can you remove yourself from a Will or Trust?
As often as we see family members fight over their inheritance, sometimes beneficiaries might choose not to inherit the assets in a Will or a Trust. This can be because he or she wants their share to go to someone else, or if they simply don’t want the responsibility and debt that may come with inheritance.
If you are that person, you might think you can simply disclaim an inheritance, but as with all things law-related, there’s a procedure that you must go through first. Before you disclaim an inheritance, you should always try to make sure what you’re agreeing to is exactly what you want to do. With that being said, let’s look at the ins and outs of how you can disclaim an inheritance.
What Does it Mean to Disclaim an Inheritance?
To disclaim an inheritance is to say that you refuse to accept the assets that you stand to inherit under someone’s trust or will. By doing this, you give up your right to receive the assets – meaning any properties, money, or debts. What happens to the assets that you disclaim in an inheritance? The assets are either passed on to the next beneficiary in line, or distributed among the other beneficiaries. What happens to the assets will depend on what the grantor wrote in their will or trust when doing their estate planning.
Reasons Why a Beneficiary Might Disclaim Their Inheritance
Inheritance is often taken as synonymous with big money, but in reality it’s a lot more complicated than that. Here are some of the reasons why you, the beneficiary, might refuse to inherit the assets.
- You may want to help another beneficiary. For instance, a wife might own half the property of a deceased spouse, and the deceased spouse might own the other half of the property. Let’s say the deceased spouse has it written in his or her will that a parent should inherit his or her half of the property upon their passing. In this case, the parent might disclaim their inheritance so the wife can receive the remaining half of the property.
- You may want to protect the family assets. Inheritance comes hand in hand with debt, as it is used to pay off someone’s debts before it is distributed to the beneficiary. Suppose you have a debt to Medicaid, and your uncle recently passed away, leaving you and your two siblings with a sum of money. If you accept the inheritance, the person in charge of executing your uncle’s will or trust is legally obligated to pay Medicaid first before any money can go to you. In this case, you may want to disclaim your inheritance so your two siblings will receive all of the money from your uncle and Medicaid will not take any of the inheritance money.
- You do not want to be responsible for Trust- or Will-Related duties. Most beneficiaries named in a will or trust may also be named as the Executor or Trustee, meaning he or she is in charge of maintaining the trust/will and distributing inheritance. This can be a hassle, especially if the inheritance you receive is significantly less than the work you would have to do for it.
- You will lose money from the inheritance. Inheritance also comes hand in hand with tax. Claiming an inheritance – whether it’s property, shares, or a sum of money – might result in you having to pay more tax. In fact, you might end up losing money from accepting an inheritance because your taxes end up higher than your normal bracket. In this case, we recommend you consult an asset protection lawyer to see whether or not this may be you.
- You want to fulfill the deceased’s will. The law is finicky, and sometimes requires a person to list someone as a beneficiary even though he or she might want all of his or her assets to go to someone else. In this case, disclaiming the inheritance would lead to the deceased’s will being more accurately fulfilled.
- You would lose your benefits. Receiving the inheritance might add to the size of your estate and render you invalid for federal benefits such as State Medicaid or Education Loan.
How to Disclaim an Inheritance?
Now that we’ve gone over all the reasons why you would want to disclaim an inheritance, here are a few things you should remember when going about it:re a few things to remember when they go about it.
- The beneficiary has to make the disclaimer in writing.
- The inheritance disclaimer needs to state that it is irrevocable, meaning that they cannot change their opinion on the disclaimer.
- The beneficiary has to declare their disclaimer within nine months of the death of the person they are inheriting from.
- If the beneficiary is a minor, they will have nine months after they turn of age (generally 18 or 21, depending on the state) to disclaim their inheritance.
- The beneficiary must not receive any benefits from the assets they are inheriting.
- The beneficiary must in no way, directly or indirectly, receive any benefits from the asset they are Disclaiming.
- The beneficiary must have no control over who receives the assets they have disclaimed.
Once a beneficiary disclaims their inheritance, the beneficiary next in line receives the inheritance, or the inheritance is divided amongst the other beneficiaries. A Disclaimer is a permanent decision, so it must be made after careful consideration. We advise beneficiaries who are considering disclaiming an inheritance to make an appointment with an estate law planning or legal consulting firm to make sure you make the decision that is the best for you.