Do you have to claim an inheritance?
If someone dies and leaves you money or property, you're under no obligation to accept it.
Perhaps you want the inheritance to go to someone else, or maybe you don't want to deal with the potential tax consequences of the inheritance. Whatever your reason, you have to be careful in how you decline the inheritance --- or you just might wind up with it after all.
The legal term for refusing an inheritance is "disclaiming" the inheritance.
You do this by sending a disclaimer documents to the executor of the deceased's estate or whoever is in charge of transferring the property. The Internal Revenue Code spells out the rules for what constitutes an acceptable disclaimer, known as a "qualified disclaimer."
To be qualified, your disclaimer must be in writing.
It must identify yourself at the "disclaimant" and identify the specific property in which you are disclaiming interest. It must put no conditions on your refusal to accept the inheritance, and it must be irrevocable --- meaning you can't change your mind later on.
In most cases, you must send it within nine months of the death of the person who left you the inheritance. If you're under 21, however, you can't disclaim interest until you reach 21, and then you must do so within nine months of your 21st birthday.
Once you've accepted an inheritance, you lose your ability to disclaim it. "Accepting" an inheritance means using it, controlling it or deriving benefit from it. For example, if your grandmother left you a car, and you drive the car, then you've accepted it.
Same thing if you deposit a check or live on a plot of real estate. According to a primer on disclaimers prepared by the law firm Robinson & Cole, even if you don't take ownership of the property, you're considered to have accepted it if you act like the owner --- by trying to tell other people what to do with it, for example.
When you disclaim an inheritance, you don't get any say in what happens to it. The property goes to whomever would be entitled to it under the deceased's will. For example, say a relative's will leaves you £65,000, with the condition that if you can't accept it, it goes to your children.
If you disclaim your interest, then the inheritance goes directly to your kids.
But if the will leaves you £65,000 with no provisions made for you not accepting the inheritance, then you can't steer the money to your kids.
Your disclaimer could mean the relative's spouse, children or favourite charity will get the money instead. It all depends on the will.