Many heirs and beneficiaries consider inheritances a blessing from their loved one. It might surprise some people to know that not everyone accepts an inheritance. There are some instances in which rejecting the inheritance might be the best option.
What are some instances in which I should reject an inheritance?
One instance in which a person might reject an inheritance is when the asset is going to be a money pit instead of an income earner. This might be because of the state of the property or because of specific concerns. It might also be a good idea to reject an inheritance if you will lose some government aid, such as if you are on Supplemental Security Income. Another instance would be if there is someone else who you think would benefit more from the inheritance, such as a sibling who is facing financial difficulties. Additionally, if an inheritance is going to cause family drama, such as an asset like a vacation home that will have to be shared, rejecting it might be a good idea. This is especially true if you can exchange your interest in the shared property for something else in the estate worth a comparable amount that you can own individually.
What happens if I reject the inheritance?
If you reject an inheritance, it will be offered to the next heir in line for the inheritance. If there is no next heir or if all possible heirs decline the inheritance, the property might become the state's possession. This would be the case if a property is denied by heirs and property taxes aren't paid. Eventually, the state will take possession of the property as a tax seizure.
Understanding how rejecting an inheritance might affect your circumstances is vital. Some situations like a current bankruptcy can impact your options, so make sure you find out your options prior to rejecting the bequest.
Source: AARP, "6 Reasons to Reject a Bequest," G.M. Filisko, accessed Sep. 13, 2015