Beneficiary Does Not Want Inheritance
It seems unbelievable that someone might want to reject a bequest. Actually, when a beneficiary does not want an inheritance, there is usually a valid or understandable reason. The beneficiary may have a financial or personal reason to disclaim a bequest. If you wish to reject a bequest from a will, the first step is to seek legal advice. This article explains what to do if you are a beneficiary who does not want to accept an inheritance.
There may be a personal reason why a beneficiary does not want an inheritance. The beneficiary may have a complicated or even painful history with the deceased. In light of this history, the beneficiary may feel unable to take the bequest. A beneficiary may choose to reject a gift but should take time to make the decision and make sure to consult with the executor.
A beneficiary may not want an inheritance for financial reasons. For instance, someone who has considerable existing wealth may prefer another person to benefit from a modest inheritance. Also, a beneficiary may not want to deal with the tax liability that comes with the testamentary gift.
Sometimes a beneficiary does not want an inheritance because they are worried about how it will affect their eligibility for social security payments. In that case, the beneficiary may want to rethink their decision, as the government may view the rejection of a testamentary bequest as a disposal under social security law. Centrelink only allows a pension recipient to gift a certain amount each financial year for a maximum of five years. A rejected bequest is likely to be considered a gift, and if a beneficiary gives away income or assets over the set amount, it will count towards their income and asset test.
Sometimes, a testator will bequeath a gift that is literally more trouble than it is worth. For instance, a testator may gift a pool table, hoping that the beneficiary will enjoy playing with the gift. The beneficiary may not want to go to the trouble (and potential expense) of arranging for delivery of the item. The beneficiary may not even have room to house such a bulky item. In that case, the beneficiary may simply choose to reject the bequest and avoid the associated inconvenience.
There is a particular danger of a beneficiary rejecting a gift when a testator leaves a beloved pet to a beneficiary in their will. The beneficiary may not be able or willing to take ownership of a pet. For this reason, a testator should always nominate a secondary beneficiary for pets. The testator should also consider leaving a cash bequest to this beneficiary to offset the costs of pet ownership.
How To Decline An Inheritance
Under Australian law, a beneficiary who does not want an inheritance can reject their entitlement. In that case, the executor and the beneficiary can sign a legal document that disclaims the beneficiary’s interest in the deceased estate. The executor can then pass the gift on to the next eligible beneficiary.
Legally, there are some points that the beneficiary needs to consider:
- They cannot disclaim the gift before the testator dies.
- They must refuse the gift by deed (in writing and conduct).
- They cannot disclaim the inheritance after previously accepting the gift.
- They cannot retract this disclaimer if other parties have relied on their refusal of the gift.
If the testator executed the will in a foreign country, the beneficiary needs to check their right of refusal according to that country’s law.
Deed Of Family Arrangement
A beneficiary who does not want their inheritance can enter into a deed of family arrangement. This document outlines an agreement to alter the terms of a valid will. All interested parties, including the beneficiary and executor of the estate, must sign the deed of family arrangement. All interested parties must be adults with mental capacity who agree to the terms of the deed.
A deed of family arrangement could, for instance, redistribute the assets of an estate to reflect the financial needs of individual family members. For example, if a parent has died and left their estate equally to their children, the siblings may agree to redistribute the estate so that the sibling in financial need receives the estate. It is important to note that a beneficiary cannot use a deed of family arrangement against public policy (for instance, to avoid a Family Provision Claim).
There are several legal ways to renounce an inheritance. A beneficiary who does not want an inheritance may choose to decline a gift by individual deed or deed of family arrangement. Whatever the reason, the beneficiary should start by seeking legal advice to ensure that they will not be responsible for the gift, asset or debt. The contested wills team at Armstrong Legal can advise you given your specific circumstances and help you draft the necessary documents to affirm your decision. Get in contact with our experienced team today on 1300 038 223 to get started.