How to Disclaim an Inheritance

How to Disclaim an Inheritance

Oh God no! I don’t want that.

Sometimes, folks inherit things they don’t want. There’s various reasons why someone would want to disclaim their inheritance. For many, it’s more practical to refuse an inheritance than to accept it. Disclaiming an inheritance is when someone gives up their rights to inherit the assets under a will or through intestacy.

Worthless property is often a primary reason why someone disclaims an inheritance.

In Colorado, it’s an easy process to disclaim an inheritance. Remember as a rule, disclaiming an inheritance is irrevocable. All refusals are final!

What does the term disclaim mean?

Briefly, it means you’re giving up the benefit of the asset. You’re refusing your inheritance under someone’s will, trust, or, if someone dies intestate, the inheritance laws of the state where the deceased lived. Moreover, you can disclaim an inheritance if you’re a beneficiary of a IRA, 401(k), or life insurance policy.

Why would I want to disclaim my inheritance?

Here’s some common reasons why someone would want to disclaim an inheritance.

  • To keep their government aid. (i.e. SSDI, Medicaid)
  • The property is worthless, or would cost money to get rid of. (i.e. real estate with hazardous waste)
  • The next beneficiary in line needs or desires the asset more than you.
  • To avoid having to pay higher taxes. (especially if the assets are sizable or income producing)
  • Lack of interest in the property. (i.e. sporting, collector, or hobby items)
  • Health Reasons
  • Charitable Giving

How do I legally disclaim my inheritance?

In Colorado, we have adopted the Uniform Disclaimer of Property Interests Act. The legal requirements to disclaim an inheritance are minimal. According to the statute to be effective the disclaimer must:

  • be in writing;
  • declare who the disclaimer is;
  • describe the interest (property) disclaimed,
  • signed by the disclaimer; and
  • delivered to the personal representative, or trustee of the estate; or
  • filed with the court proceeding over the estate.

How does it work?

When the estate representative receives the document, or it’s filed with the court it becomes retroactive, as well as irrevocable. The person’s disclaimed interest passes as if they had died immediately before the time of distribution. Then the inheritance goes to the next person in line according to the will or trust. Or if the person died without a will, according to the laws of intestacy.

In A Nutshell

If you’re a beneficiary you have the right to refuse a gift or inheritance, and may choose to do so for many reasons. You can’t be forced you to accept something you don’t want.

There are however rules and procedures to follow when exercising your right to disclaim your property. Once it’s disclaimed, the property goes back to the estate, and devolves to the next in line to inherit.

This article is for educational purposes only, and does not constitute legal advice about your case or situation. There may be exceptions to the information outlined above. Please consult an attorney if you have specific questions about your inheritance or probate matter.

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