Disclaimer of inheritance

What it means

A disclaimer must be in writing, must be made before accepting any benefit, and must generally be made within a period set by federal tax law to be effective for tax purposes.

The disclaiming person cannot direct where the property goes. It passes to whoever is next under the will, the trust, the beneficiary designation, or intestacy.

It is irrevocable.

Why it matters

It is used to redirect an inheritance to the next generation, to keep an asset out of a taxable estate, or to avoid an inheritance that would end a disabled person's benefits.

The timing is unforgiving. Accepting anything first — cashing a check, taking a distribution — usually destroys the option.

When you are likely to meet it

• When an inheritance would cause a tax or benefits problem.
• When an older beneficiary would rather it went to their children.
• When a beneficiary is insolvent or in care.

How this varies by state

Additional state requirements for a valid disclaimer, and its effect on creditors, are set by state law.

Related terms

• Beneficiary designationA named person on an account or policy who receives it directly on death, without it passing through the will or probate.
• Contingent beneficiaryThe person who receives an account or policy if the first-named beneficiary has died or cannot take it.
• Estate taxA tax on the value of what somebody left, paid by the estate before anything is distributed.
• HeirSomeone entitled to inherit under state law when there is no will — not simply a relative.
• IntestateDying without a valid will, so the estate passes by the state's own rules rather than by anybody's wishes.
• Per stirpesA way of dividing an inheritance so that if a beneficiary has died, their share passes down to their own children rather than to the other beneficiaries.
• Primary beneficiaryThe first person in line on an account or policy, ahead of any contingent beneficiary.
• RenunciationDeclining an appointment as executor. It is always allowed, and it is done in writing.
• Special needs trustA trust that holds money for a person with a disability without disqualifying them from means-tested benefits.

Sahvelo guidance that uses this

• Beneficiary designations