Saying "Thanks, But No Thanks" to an Inheritance

It’s not uncommon for an heir or designated beneficiary to decide they do not want what’s been left to them—whether due to emotional reasons, potential tax consequences, or because accepting the asset would complicate their own estate plans.

In such cases, the legal tool to use is a disclaimer of interest (also called a “qualified disclaimer”). This is a formal legal document in which the heir or beneficiary refuses the inheritance, allowing it to pass as if they had predeceased the decedent.

Pros:

• Avoids potential estate or income tax burdens tied to the asset.

• Can allow the asset to pass directly to the next eligible beneficiary (often children or siblings).

• Helps keep assets out of an estate for Medicaid or financial planning purposes.

Cons:

• Must be done quickly—federal law generally requires filing within 9 months of the decedent’s death.

• Once filed, it’s irrevocable—you cannot change your mind later.

• You cannot direct where the property goes; it follows the terms of the will, trust, or beneficiary designation.

Bottom line: If you’re considering disclaiming an inheritance, timing and proper execution are critical. A misstep can cause tax issues or unwanted consequences. Always consult an attorney before making the decision.