Declining An Inheritance (WA)
As unlikely as it may seem, some beneficiaries do not want to accept their inheritance. Typically, a beneficiary will decline a bequest for understandable personal or financial reasons. This article outlines the process for declining an inheritance in Western Australia.
Personal Reasons for Declining An Inheritance
Sometimes a beneficiary has a difficult or even distressing history with the deceased. In that case, the beneficiary may feel it is morally repugnant to accept an inheritance. A beneficiary who wants to decline a bequest for personal reasons should take time to seriously consider their decision and talk the decision over with the executor of the estate.
Financial Reasons For Declining An Inheritance
On the other hand, there may be financial reasons why a beneficiary does not want an inheritance. For instance, a wealthy beneficiary may not need financial assistance and would prefer someone else benefit from the inheritance. Also, a beneficiary may not want the tax liability that attends some inheritances.
A beneficiary may be wary of accepting an inheritance because they receive social security payments. In that case, the beneficiary should reconsider their decision, as declining a gift may be considered a “disposal” under social security regulations. Centrelink permits pension recipients to give away a set amount each financial year for a maximum of five years. If a beneficiary gives away a testamentary gift over the set amount, it will contribute to their income and asset test.
Inconvenience Of Inheritance
On occasion, a testator will leave a beneficiary a gift that is more inconvenient than helpful. For instance, a testator might have a beloved church organ that they hope the beneficiary will enjoy after their death. The beneficiary may live in a small apartment and have no way to house the gift. In that event, the beneficiary may regretfully decline the bequest as it is more trouble than it is worth. A testator should be particularly aware of this potential risk if they leave a pet to someone in their will. The beneficiary may be unwilling or unable to take ownership of the pet after the testator’s death. For this reason, a testator must nominate a secondary beneficiary when making arrangements for a beloved pet. The testator should also consider providing a cash bequest to this beneficiary to offset the pet’s ongoing costs.
Things to be aware of when Declining An Inheritance
In Western Australia, a beneficiary can reject a bequest in a will or an entitlement to an intestate estate under the Administration Act 1903. However, the beneficiary must be aware that:
- they can only disclaim the gift after the testator dies;
- they need to refuse the bequest in both writing and conduct;
- they cannot reject the gift after accepting the inheritance; and
- they cannot accept the gift after rejecting it if others have relied on their rejection of the inheritance.
Deed Of Family Arrangement
When a beneficiary does not want an inheritance, they can sign a deed of family arrangement. This document is an agreement between the parties to alter the distribution of the deceased estate. For instance, the deed of family arrangement might redistribute an unwanted gift to another family member in financial need. A beneficiary can give up all or only some entitlement via this agreement. There are no legal limitations on the type of agreement that the parties can make through a deed of family arrangement.
The parties to a deed must be fully informed and have legal competency to participate in the agreement. All interested parties, including the beneficiary, executor or administrator of the estate, and other entitled beneficiaries, must sign a deed of family arrangement. The deed comes into effect as soon as it is signed, unless the document stipulates a later effective date.
The beneficiary cannot enter into a deed of family arrangement that violates public policy (for instance, to subvert a Family Provision Claim). It is also impossible to use a deed to redistribute an inheritance from a person under 18 years or someone who cannot consent to the agreement. Only the Supreme Court can give a minor or vulnerable beneficiary permission to reject their inheritance.
Seek Legal Advice before declining an inheritance
When a beneficiary does not want an inheritance, they should consult a solicitor before signing a deed of family arrangement. The beneficiary must understand the legal and financial consequences of signing away their inheritance. The consequences include not only giving up the bequest but possibly also tax liability and forfeiture of the right to make a Family Provision Claim against the estate.
A beneficiary who does not want an inheritance should seek legal advice to talk over their options. The WA contested wills team at Armstrong Legal can help you with advice specific to your circumstances and draft the appropriate documents to decline your inheritance. Please contact our team of specialist solicitors on 1300 038 223 for legal assistance.