There was a time, in the not-too-distant past, when inheriting something was a benefit and nothing but good news. But, with the crash of ’07 and the subsequent plummeting of real estate values, that’s no longer true.
Probate lawyers such as myself are increasingly answering the question: What if I don’t want it? For instance, what happens if your eldest son doesn’t want the family vacation home you left him? Or your sister decides that the condo you so lovingly cared for isn’t worth the headache because it’s underwater?
Minnesota Inheritance Laws Explained
First, no one is REQUIRED to accept an inheritance in Minnesota. Most heirs or beneficiaries are free to reject the bequest. When a beneficiary rejects a bequest, it is legally called a “disclaimer.” This is the legal equivalent of simply saying, “I don’t want it.” Legally, it will pass as if the person rejecting it died before you. Thus, who it passes to depends upon what your estate planning documents, such as a will, trust, or beneficiary form, provide will happen if the primary named beneficiary is not living. This process ensures that the inheritance follows the intended path outlined in your estate plan, maintaining the integrity of your wishes.
Legal Implications of Refusal
When an heir refuses an inheritance, they must legally disclaim their right to the asset. This process involves a formal, written refusal, usually filed with the probate court within a specified time frame, typically nine months from the decedent’s death. The disclaimer is irrevocable, and the person rejecting the bequest cannot direct where it then goes. By disclaiming, the heir essentially acts as if they predeceased the benefactor, allowing the asset to pass to the next eligible beneficiary, as outlined in the will or trust. In some cases, unclaimed inheritances are transferred to state unclaimed property agencies, where they are kept until the rightful heirs can be found. Addressing potential refusals proactively in your estate plan can help mitigate any significant consequences for the distribution of your assets.
Reasons for Disclaiming an Inheritance
Now, you may be wondering why on earth someone would reject a generous sum of money or a piece of real estate. There could be several reasons why a beneficiary might not want to accept such a bequest:
- The named beneficiary may prefer that the asset pass to the next named beneficiary. Perhaps that is their own child, and they decide they do not need the asset, but their child could make better use of it.
- The beneficiary may have a large and valuable estate of his or her own and does not need the money. Rejecting or disclaiming the bequest will not increase the size of the named beneficiary’s estate, and thus, it will not increase the estate taxes due upon their later death.
- What if the asset needs a lot of upkeep or maintenance, as with a vacation home or classic car? The person named to receive that asset may decide that taking on that responsibility is simply not something he or she wants to do. By rejecting or disclaiming the asset, the named beneficiary will not inherit the “headache” of caring for and being liable for the property.
- A common scenario right now is someone inheriting a home that is underwater. Selling it may require thousands of dollars in repair/upgrades that the beneficiary simply doesn’t have and they aren’t interested in assuming a mortgage on a home that is treading water. Instead, they simply choose to walk away.
Alternative Solutions
To address potential refusals in your estate plan, you can explore alternative solutions that ensure your assets are distributed according to your wishes. Here are several strategies to consider:
- Contingent Beneficiaries: Designate backup beneficiaries who will receive the assets if the primary heir refuses. This ensures the inheritance is passed on smoothly without legal complications.
- Charitable Donations: Consider including charitable organizations as potential beneficiaries. If an heir refuses an asset, it can be redirected to a cause you care about, ensuring it has a positive impact.
- Revise Your Estate Plan: Regularly review and update your estate plan to reflect changes in your heirs’ circumstances and preferences. This proactive approach can prevent refusals and ensure your estate plan remains effective.
- Trust Structures: Utilize trust arrangements that allow for greater flexibility in asset distribution. Trusts can be designed to accommodate changes in heirs’ desires and needs, providing an adaptable solution.
Communicating with Your Heirs
Open communication with your heirs is essential for effective estate planning. Discussing your plans and their preferences can prevent misunderstandings and potential refusals. Start by having honest conversations about your intentions and the reasons behind your decisions. Encourage your heirs to express their thoughts and concerns, which can help you adjust your plan to better suit their needs. Involving your heirs in the planning process fosters transparency and trust, making them more likely to accept their inheritance.
Contact a Minnesota Estate Planning and Probate Attorney Today
A knowledgeable estate planning attorney can guide you by setting up your plan to leave specific assets to beneficiaries who are in the position to receive them as you intended. We all feel that leaving something to someone is a gift; work with Unique Estate Law to keep it that way.