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Estate Planning Blog

Serving Clients Throughout North Central Missouri

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Can You Refuse an Inheritance?

No one can be forced to accept an inheritance they don’t want. However, what happens to the inheritance after they reject, or “disclaim” the inheritance depends on a number of things, says the recent article “Estate Planning: Disclaimers” from NWI Times.

A disclaimer is a legal document used to disclaim the property. To be valid, the disclaimer must be irrevocable, in writing and executed within nine months of the death of the decedent. You can’t have accepted any of the assets or received any of the benefits of the assets and then change your mind later on.

Once you accept an inheritance, it’s yours. If you know you intend to disclaim the inheritance, have an estate planning attorney create the disclaimer to protect yourself.

If the disclaimer is valid and properly prepared, you simply won’t receive the inheritance. It may or may not go to the decedent’s children.

After a valid qualified disclaimer has been executed and submitted, you as the “disclaimor” are treated as if you died before the decedent. Whoever receives the inheritance instead depends upon what the last will or trust provides, or the intestate laws of the state where the decedent lived.

In most cases, the last will or trust has instructions in the case of an heir disclaiming. It may have been written to give the disclaimed property to the children of the disclaimor, or go to someone else or be given to a charity. It all depends on how the will or trust was prepared.

Once you disclaim an inheritance, it’s permanent and you can’t ask for it to be given to you. If you fail to execute the disclaimer after the nine-month period, the disclaimer is considered invalid. The disclaimed property might then be treated as a gift, not an inheritance, which could have an impact on your tax liability.

If you execute a non-qualified disclaimer relating to a $100,000 inheritance and it ends up going to your offspring, you may have inadvertently given them a gift according to the IRS. You’ll then need to know who needs to report the gift and what, if any, taxes are due on the gift.

Persons with Special Needs who receive means-tested government benefits should never accept an inheritance, since they can lose eligibility for benefits.

A Special Needs Trust might be able to receive an inheritance, but there are limitations regarding how much can be accepted. An estate planning attorney will need to be consulted to ensure that the person with Special Needs will not have their benefits jeopardized by an inheritance.

The high level of federal exemption for estates has led to fewer disclaimers than in the past, but in a few short years—January 1, 2026—the exemption will drop down to a much lower level, and it’s likely inheritance disclaimers will return.

Reference: NWI Times (Nov. 14, 2021) “Estate Planning: Disclaimers”

 

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What Do I Need to Do after the Death of My Spouse?

It probably is the last thing on your mind, but there are tasks that must be accomplished after the death of a spouse. You might want to ask for help and advice from a trusted family member, friend, or adviser to sort things out and provide you with emotional guidance.

Kiplinger’s recent article entitled “Checklist: Steps to Take after Your Spouse Dies” provides a checklist to help guide you through the most important tasks you need to complete:

Don’t make any big decisions. It’s not a good time to make any consequential financial decisions. You may wish to sell a home or other property that reminds you of your spouse, but you should wait. You should also refrain from making any additional investments or large purchases—especially if you weren’t actively involved in your family’s finances before the death.

Get certified copies of the death certificate. You’ll need certified copies of your spouse’s death certificate for any benefit claims or to switch over accounts into your name. Ask the funeral home for no fewer than 12 copies. You also may need certified marriage certificates to prove you were married to your late spouse.

Talk to your spouse’s employer. If your spouse was working when he or she passed, contact the employer to see if there are any benefits to which you are entitled, such as a 401(k) or employer-based insurance policy. If you and your dependents’ medical insurance was through your spouse’s job, find out how long the coverage will be in effect and begin making other arrangements.

Contact your spouse’s insurance company and file a claim. Get the documentation in order prior to contacting the insurance company and make certain that you understand the benefit options to claim a life insurance benefit.

Probate the estate. Get a hold of the will. Contact the attorney for help in settling the estate. If your spouse didn’t have a will, it will be more complicated. Reach out to an experienced estate planning attorney or elder law attorney for advice in this situation.

Collect all financial records. Begin collecting financial records, including bank records, bills, credit card statements, tax returns, insurance policies, mortgages, loans and retirement accounts. If your spouse wasn’t organized, this might take some time. You may be required to contact companies directly and provide proof of your spouse passing, before being able to gain access to the accounts.

Transfer accounts and cancel credit cards. If your spouse was the only name on an account, like a utility, change the name if you want to keep the service or close the account. Get a copy of your spouse’s credit reports, so you’ll know of any debts in your spouse’s name. Request to have a notification in the credit report that says “Deceased — do not issue credit.” That way new credit won’t be taken out in the spouse’s name.

Contact government offices. Have your spouse’s Social Security number available and call the Social Security Administration office to determine what’s required to get survivor benefits. Do this as soon as possible to avoid long delays before you get your next Social Security payment. You may also qualify for a one-time death benefit of $255. If your spouse served in the armed forces, you may be eligible for additional benefits from the Department of Veterans Affairs. Therefore, contact your local office.

Change your emergency contact information. Change any of your or your family members’ emergency contact info that had your spouse’s name or number listed as someone else’s primary point of contact.

This checklist is a good way to help with the pressing tasks. You can also contact an estate planning attorney or elder law attorney for help.

Reference: Kiplinger (Aug. 27, 2020) “Checklist: Steps to Take after Your Spouse Dies”

 

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