Tuesday, December 30, 2014

I have heard that I can “disclaim” inherited assets or property. What does this mean?

A “disclaimer” is the refusal to accept a gift, bequest, or beneficiary designation on an account (e.g., an IRA or life insurance policy).

The person making the disclaimer must disclaim this property within nine months and not have accepted any interest in the property.

As an example, say Sue is the named beneficiary on her uncle’s checking account. If the uncle passes away January 1 and Sue wants to disclaim the account, she must file her disclaimer by September 1 of the same year. She must also have not transferred the account into her name or withdrawn any funds from the account for the disclaimer to be valid.

A beneficiary may wish to disclaim part or all of their inheritance depending upon their personal circumstances, family dynamics, or potential tax consequences to themselves or the Estate.

Any time you receive an inheritance, you should consider the potential pros and cons—both personal and financial—of accepting versus disclaiming the property. As an experienced Estate Planning and Administration firm, the Paton Law Firm can guide you in making what can otherwise be a challenging and complex decision.

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