In our last post, our blog spent some time discussing how those individuals who learn that they will be receiving some sort of inheritance from a deceased family member or friend may ultimately find themselves feeling flattered that their loved one left them a gift, but also wondering if they really want it.
To that end, we began discussing how people are legally permitted to refuse a gift from a person’s estate via a disclaimer. We’ll continue our discussion in today’s post, examining why a person would be inclined to refuse an inheritance.
Do taxes ever play a role in why a person would refuse to accept a gift made via inheritance?
Taxes are often one of the reasons people choose to file a disclaimer, as they are concerned that accepting the gift would mean that federal estate taxes would have to be paid upon their eventual demise.
While this is understandable, experts encourage people to remember that the federal estate tax exemption currently sits at a whopping $5.45 million, such that they don’t have to worry unless their estate is close to that value or would be if they accepted the gift.
What if you want to pass a gift on to another beneficiary?
A disclaimer can be an effective legal mechanism through which to ensure that a gift is passed to another beneficiary. Indeed, it removes the hassle of having to take the asset, possibly re-title it and then re-transfer possession of it to the next beneficiary.
By way of example, consider an automobile owned by a grandparent that is designated for their adult child even though they already own an automobile and their college-aged grandchild is in desperate need of one. Here, the adult child (i.e., the parent) might choose to disclaim the vehicle so that it goes directly to the grandchild (i.e., their son or daughter).
What if you want to avoid potentially troublesome real property?
If you’ve been left real property that you have no interest in owning thanks to anything from high property taxes to major structural issues, a disclaimer would indeed enable you to avoid having anything to do with it.
Consider speaking with an experienced legal professional if you have questions about disclaimers or other estate planning concerns.