Estate planning, properly conducted, allows an individual to pass along his or accumulated wealth and property to heirs. On occasion, despite the best plans and intentions of the testator, it may be advisable to decline to accept a bequest or inheritance under a will or trust. At the Boston law firm of Taylor, Ganson & Perrin, LLP, our attorneys have been helping individuals and families with trusts and estates matters since 1935. We are well positioned to advise people on whether they should accept an inheritance.
While it may sound strange, there are a number of reasons that declining an inheritance might be the best option. A common reason for disclaiming an inheritance is estate taxes. Accepting inheritance may raise the size of the beneficiary's estate, triggering inheritance tax liabilities for his or her heirs. Passing along the inheritance to another family member may also coincide more closely with the property distribution intentions of the testator, allocating the assets as they might have wished. In either case, it is critical to discuss declining an inheritance with a knowledgeable tax and estate lawyer before accepting a bequest. Contact Taylor, Ganson & Perrin, LLP to learn whether disclaiming a bequest is the correct option.
There are other ways that an heir might decline or deflect an inheritance. For example, the inheritance may be used to fund a trust, sometimes called an inheritor's trust. This trust can protect the asset in the event of financial disaster or divorce, and may be transferable to the heir's children free from estate tax. A bequest of real estate or a business could be valued in a way that allows the beneficiary to pay the taxes over time. Qualified conservation easements can be taken to reduce taxes. Disclaiming an IRA in favor of another family member younger than the first heir may extend the tax benefits of an IRA.
All these options have complex rules. If the transactions are done incorrectly, they may trigger a significant tax liability. It is critical to talk with a skilled estate-planning attorney before accepting any inheritance or trying to pass it along to another family member. For information about how inheritance disclaiming may benefit an entire family, contact our Boston lawyers at Taylor, Ganson & Perrin, LLP.