Declination of Interest in Wills

By Heather Frances J.D.

Wills generally describe how you want your assets to be distributed after your death by designating specific beneficiaries. But no matter what assets you try to give or whom you want to give them to, the beneficiary you name in your will always has the option to decline the inheritance. State laws vary, but a declination typically requires the beneficiary to take formal steps to renounce the inheritance received.

Disclaimer

When a beneficiary renounces his legal rights to a bequest in a will, or otherwise declines an inheritance, his action is called a disclaimer of interest or renunciation of interest. Generally, such a disclaimer is irrevocable, meaning the beneficiary cannot later change his mind. Once the beneficiary files the appropriate disclaimer paperwork, as required by the state and within the state's prescribed time limits, the disclaimer is effectively made and is a permanent action. As a result, the beneficiary is treated as if he was never named as a recipient of the asset. This is not the same as a transfer made directly from a beneficiary to a third party, although a disclaimed inheritance typically passes to someone else after it is disclaimed.

Reasons to Disclaim

Beneficiaries have varied reasons for disclaiming an inheritance, including simply not wanting to own the particular asset. For example, if you leave your china set to a beneficiary who doesn’t like the set, he could disclaim the inheritance and let it go to someone who does want it. Beneficiaries may also want to disclaim an inheritance if it negatively impacts their taxes or would likely go to creditors. Beneficiaries who receive public benefits, like Medicaid, might disclaim an inheritance in an attempt to continue qualifying for those benefits, but this may not be effective because a disclaimer typically disqualifies a Medicaid recipient from receiving benefits for a certain period, as determined by state law.

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Effect of Disclaiming

The effect of your beneficiary’s disclaimer varies by state law. Some states treat the disclaiming beneficiary as though he died before you, so his share in your estate is distributed to other beneficiaries accordingly. This may result in the disclaiming beneficiary’s share going to his children, which makes it similar to a gift from the disclaiming beneficiary to his children -- but without a gift tax. But some states, like Texas, permit you to make other arrangements in your will to specify to whom a disclaimed inheritance should go. If you don’t want a specific person to inherit any of your assets, you can include language in your will specifying that no inheritance shall go to that person even if a beneficiary disclaims a bequest from you.

Authority to Disclaim

A beneficiary can disclaim his own interest or, if he is underage or mentally incapacitated, his legal guardian can disclaim it on his behalf. Some states, like Montana and Texas, allow a person acting as a beneficiary’s agent to disclaim that beneficiary’s share under the authority of a power of attorney. Many states require that formal disclaimers from someone with authority to act on behalf of another be submitted within a certain period of time, typically within nine months of your death, and disclaimers after that period may not be effective.

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References

Related articles

Contesting a Will as a Beneficiary

Will contests take place in probate court: One of the functions of probate court is to hear any disputes pertaining to the execution of a will. A beneficiary who seeks to contest a will must have verifiable grounds upon which to do so. If a probate court deems the evidence sufficient, it may declare the entire will invalid or merely strike certain provisions.

Texas Estate Laws on Disclaiming an Inheritance

Some things in life – such as paying taxes – are unavoidable. Accepting an inheritance isn't one of these things. Under a Texas law known as the "relation-back doctrine," when someone names you as beneficiary in his will or trust, he's offering you property, nothing more. You don't have to accept it, but Texas has rules you must abide by if you want to refuse or disclaim it. After you do so, you can't change your mind.

Legal Age to Inherit

A child considered a minor by her state of residence can inherit property, but she can't manage it. The legal age of inheritance, meaning control of the property, varies by state and by the value of the inheritance but is 18 in most cases. For example, a child may take control of his inheritance at 18 in Colorado, but if the inheritance is more than $10,000, he has to wait until he's 21. A parent or relative of a minor child has more than one option when deciding how to provide for a minor's inheritance.

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