Disclaiming
an Inheritance
You can refuse something you inherit so it passes to the next person in line, without it counting as a gift from you. The rules are strict: generally in writing, within 9 months, and before you use any of it.
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You can say no to an inheritance
If you are named to inherit something you do not need or want, you can disclaim it. The property then goes to whoever is next in line, as if you had died before the person who left it. Done correctly, it does not count as a gift from you, so it does not use any of your own gift or estate tax exemption.
What makes a disclaimer qualified
| Requirement | What it means |
|---|---|
| In writing | An irrevocable, unqualified refusal, signed and identifying the interest disclaimed |
| Delivered within 9 months | Received by the executor, trustee, or holder of title within 9 months of the transfer (for an inheritance, the death), or of turning 21 if later |
| No benefits accepted | No use of the property, income from it, or direction over it before disclaiming |
| No say in who gets it | The property passes under the will, trust, beneficiary form, or state law, as if the disclaimant had died first |
| Surviving spouse exception | A spouse may disclaim into a trust that still benefits the spouse, such as a credit shelter trust |
Why people disclaim
- To let it pass to your children: if they are next in line, disclaiming moves the property to them without a gift from you.
- To avoid more taxable income: an inherited IRA brings taxable withdrawals. If you are in a high bracket and the next beneficiary is in a lower one, disclaiming can reduce the total tax.
- To help a surviving parent’s plan: sometimes a disclaimer lets the family use tax exemptions that would otherwise be lost.
Things to know first
- You cannot pick who gets it. It goes to whoever the will, trust, beneficiary form, or state law names next. Check who that is before you decide.
- Do not touch it first. Using the property, taking income from it, or moving it can disqualify the disclaimer. For an inherited IRA, taking the required distribution for the year of death does not by itself prevent disclaiming the rest.
- You can disclaim part. A fraction or a dollar amount can be disclaimed and the rest kept.
- It does not escape tax debts. A disclaimer does not defeat a federal tax lien against you, and it can count against you for Medicaid eligibility.
- Follow state rules too. Your state has its own requirements for the form and delivery of the disclaimer.
What we need from you
- A copy of the will, trust, or beneficiary designation that names you
- The date of death
- Whether you have received or used anything from the inheritance
- For an IRA, whether any distributions have been paid to you
Frequently Asked Questions
Can I refuse an inheritance?
Yes. You can disclaim it in writing, and it then passes to whoever is next in line as if you had died first. To avoid being treated as a gift from you, the disclaimer generally has to be delivered within 9 months of the death, before you have accepted any benefit from the property.
If I disclaim, can I choose who gets it instead?
No. The property goes to whoever the will, trust, beneficiary form, or state law names next. If you direct where it goes, it is treated as accepting the property and then giving it away, which can be a taxable gift.
Can I disclaim an inherited IRA?
Yes, in whole or in part. Taking the required distribution for the year of death does not by itself prevent you from disclaiming the rest. The account then passes to the next beneficiary, who takes over the withdrawals and the income tax on them.
Does disclaiming protect the money from my creditors or the IRS?
Not from the IRS: a disclaimer does not defeat a federal tax lien against you. Protection from other creditors depends on state law, and a disclaimer can count against you when applying for Medicaid.