What Happens if my Beneficiary Turns Down My Bequest?

It is not a common situation but it does happen. After you pass, your will is entered into probate and your beneficiaries are notified of your bequests but there is a problem: they do not want it. They refuse to take ownership of the property you have left them and in doing so have thrown a wrench in your well laid estate plan.

No Claim to the Bequest

When a beneficiary turns down a bequest this is known legally as a “disclaimer.” There is no requirement under a law that a person who is left assets or property under a will must take it. You cannot force property onto someone else. If a person disclaims a bequest, the person is treated as if they had predeceased the testator and the property will pass onto another beneficiary.

Thinking Ahead, Thinking of Others

Most people would assume that a person would never turn down an inheritance. After all, most people view a bequest as essentially free money. But there are a number of reasons, financially, emotionally and ethically, that a person would want to turn down a bequest.

For older individuals disclaiming an inheritance is a way to avoid paying a possible estate tax twice: once when they receive the inheritance and again after their children receive it. Depending on how a will is drafted, if the predeceased disclaims the inheritance, it will then be distributed to their issue such as children and grandchildren. Older individuals may also disclaim a bequest in order to minimize their own estate taxes so the bequest does not inflate the value of their estate.

Many people turn down bequests because they do not need the money. Wealthy individuals familiar with the will may know that if they turn down their bequest that it will pass onto a family member or someone else who has greater need to the money than themselves.

Others may turn down receiving an asset because the asset requires a lot of maintenance or is more trouble than it is worth. Children receiving their parent’s broken down car or unmaintained real estate may not want to deal with the trouble of fixing up the property and selling it.

Avoid Disclaimers

The best way to avoid having your bequests refused is to plan appropriately. If you know that a person will turn down your bequest, do not bother leaving it to them. They have already made their intentions clear. Making bequests to people who you know will disclaim them only makes administering your estate more of a headache for your executor. Think of others who you would like to leave your assets to, perhaps those who could use it the most and who deserve it.


See Related Posts:

Revoking Your New York Will

Back to Basics: Deciding Who Will Inherit From Your Estate

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