For various reasons, you may wish to disclaim property that was willed to you by a relative. Beneficiaries may file such a disclaimer to save income and property taxes, avoid the expenses of ownership, or to pass the property on to another heir. Although a disclaimer can be a brief and simple document, it's important to follow the relevant state laws, as well as IRS rules and guidelines, whenever taking this action.
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Create a document, heading it "Disclaimer." IRS rules require that you prepare and execute this document within nine months of the death of the person who made the bequest. If you miss the deadline, the property automatically becomes a personal asset for income tax purposes.
Complete the disclaimer by using language to the effect that you are unconditionally disclaiming property bequeathed to you in a will. Identify the will by date and author; identify the property by address and/or legal property identification number. You may not direct ownership to another person; by law, the contingent beneficiary will gain ownership.
Sign and date the disclaimer. You may not execute a disclaimer before the death of the testator -- the person who wrote the will. In addition, you may disclaim a portion, and not all, of an inheritance. Have the disclaimer witnessed and notarized by a notary public, who is authorized by law to witness your signature.
File the disclaimer in the local court handling the probate case, if the estate is going through probate, and send it to the executor of the estate via certified mail. If the property was bequeathed to you in a trust, and the estate is avoiding probate, send the disclaimer to the trustee via certified mail. The trustee is the individual handling the estate and the bequests; he has the responsibility to oversee the transfer of assets to the beneficiaries.
- Will and/or trust bequeathing property
Tips & Warnings
- A minor may not disclaim inherited property until he reaches the legal age of adulthood.
- Disclaimers are irrevocable. If you change your mind, you may not reclaim the property after filing a disclaimer.
- You may not file a disclaimer if you have accepted any rent or other income from the property you wish to disclaim.
- It's important to follow IRS rules for disclaiming property if there is a contingent or second beneficiary -- as there usually is -- to whom the property will pass after you file a disclaimer. If you do not file a proper disclaimer, and simply try to deed the property over, the IRS will consider the house as your personal asset and may levy gift tax on the next beneficiary.
References & Resources
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