New York Estate Planning & Elder Law Blog
Being named as a beneficiary to the estate of a loved one often comes with its own set of responsibilities and expectations following the passing of the deceased. Often times, individuals create estates and trusts to ensure their hard earned assets like homes, businesses, and sentimental items remain with close family members to ensure these articles are well taken care of and create a lasting legacy for future generations.
However, sometimes the strings attached with inheriting such assets are simply too much for the beneficiary to bare and could actually create a burden instead of benefit. Many of us have probably seen movies or heard news reports of beneficiaries needing to perform some sort of unusual task to claim an inheritance like taking care of a pet or living in a home for a certain period before the property may be sold.
While many of these examples are rare and impractical to say the least, there are many times when accepting an inheritance can create untenable financial liabilities like paying property taxes on homes and businesses. Despite the financial hardship some inheritances create, beneficiaries may still want to ensure their portion of the estate remains under their sphere of influence and provide some good to other families members down the line.
Who inherits an estate if I decline acceptance?
Under the law, beneficiaries can disclaim an inheritance and allow the assets to be passed down to their next of kin. The process works as if the named beneficiary passed away before the individual who created the estate, transferring the rights to the estate to another family member. Wealthier beneficiaries often disclaim inheritance to allow children and other heirs to build their own wealth and reap the benefits state and federal tax codes may provide.
Practical scenarios for disclaiming an estate may include avoiding estate taxes by passing those assets on to another family member in a lower tax bracket, able to better enjoy the benefits of the inheritance. Another example could include disclaiming an inherited IRA so other heirs can stretch out the distribution of the accounts benefits over a greater period of time.
Whatever you may decide to do with your estate, we strongly advise individuals to thoroughly weigh the benefits and the risks of making such a move. By disclaiming an inheritance, named beneficiaries essentially forfeit all their claims to estate and may not be able to recover anything from the estate, depending on the language of the deceased last will and testament.