Disclaimer of Inheritance Form Overview: The Ultimate Guide

What is a Disclaimer of Inheritance?

The legal definition of Disclaimer of Inheritance is the refusal to accept an inheritance from an Estate or a Trust.
A standard Probate Court "Disclaimer of Interest" or "Disclaimer of Inheritance" is a form that basically says, "I do not want to receive my share of the estate".
It does not mean you are giving up your right to something, it just means that you do not want it. Therefore, you probably should not sign it unless you do not want the asset in question. It is usually a "gift" for estate tax purposes only. So a co-participant(s) in a trust or estate has a right to sign a "disclaimer" so that his/her share doles out to the next person in line without any tax liability.
For example, if Mom dies, and has two kids (John and Sue) that are equal beneficiaries, then each child is responsible for paying their share of the estate taxes ($100 , 000). However, if one child signs a disclaimer, then his/her share passes to the other sibling, and that sibling then is responsible for paying the entire estate tax. So the disclaimer benefits the child that receives the remaining share of the estate after a disclaimer.
This is a general courtesy to relieve another of paying the taxes. This is therefore done at the time of death and prior to the distribution of any assets. The form needs to be signed off by the remaining beneficiary, and it will allow him/her room on their future tax return to deduct the portion paid to the previous sibling as a gift.
There are a few other technicalities involved that you could explore with your Estate Planning Attorney, but this is the general concept behind the "Disclaimer of Inheritance" form.

Situations that Call for a Disclaimer of Inheritance

A disclaimer of inheritance is appropriate in those cases where a person (the "disclaimant") does not wish to accept an inheritance in whole or in part, for a variety of reasons. Inheritance property can lead to negative tax consequences or simply not fit with the remaining assets or intentions of the disclaimant.
A disclaimer done pursuant to North Carolina law must be in writing, signed by the disclaimant, and delivered to the executor of the estate. If an estate or trust is involved, the document must be delivered to the fiduciary of the applicable estate or trust. In North Carolina, a person is not permitted to refuse to accept an inheritance if the gift of property requires the donee to provide services to the donor (such as care of the donor, or services related to the property), or if the donee merely has a future interest in the property (as opposed to an absolute gift at the donor’s death). This means that if you are acting as an Agent under a Durable Power of Attorney, or otherwise providing services to the donor during their lifetime, you cannot later refuse to accept the inheritance from that donor.
In addition to situations where there would be a negative tax effect from accepting property, a common scenario involves a divorce. Because property is typically divided evenly in divorces, the divorcing spouse may allow the other’s parents pass property directly to their children, without going through the divorcing spouse. Such a transfer could prevent the ex-spouse from receiving an inheritance if the property were left directly to the children of the donor.
Inherent in the decision whether or not to use a disclaimer of inheritance is the decision when to use one. Because the disclaimer has to be made within a relatively short period after the donor’s death, the person who will be making the disclaimer must be notified of the decedent’s death and otherwise sufficiently informed of the circumstances so that a disclaimer can be made. This means that you cannot go to your mailbox on Monday morning, receive an inheritance on Monday afternoon, and then contact an attorney Monday evening to have them draft and file a disclaimer. A disclaimer made more than 9 months after the donor’s death is ineffective.
The timing of the disclaimer is also important where the property passes to the donor’s alternate beneficiary should the primary beneficiary choose to refuse the property. Each beneficiary has the right to receive the property until they affirmatively refuse it. If the beneficiary refuses the inheritance later than 9 months after the donor’s death, the inheritance passes to the alternate beneficiary.

How to Legally Disclaim an Inheritance

The requirements for how an heir must legally disclaim an inheritance are set out in Virginia Code § 64.1-162.1 and must be followed consistently with the provisions of Virginia law that pertain to gift and estate taxes, such as IRS form 709.
The person who is disclaiming (the disclaimant) must sign a written disclaimer instrument when disclaiming property. The following conditions must also be met in order for the disclaimer to be valid: In addition to the above requirements, the law also requires that the disclaimant not show any kind of acceptance of the property that they are disclaiming. For instance, if real property was left to a disclaimant through an estate or will and was left unadministered (not passed through probate), the disclaimant would not be able to accept any kind of benefit concerning it outside of an assertion of a claim against it. A claim against an estate would only be valid if it would have passed to the disclaimant had they not disclaimed the inheritance.
While a disclaimer does not have to include the relinquishment of any provisions in a will or deed made under a power of appointment, the instrument provided must be executed within nine months following the date of the decedent’s death, during which time it cannot be revoked.

How to Download Disclaimer of Inheritance PDF Form

If you have decided to forego your right to receive any inheritance from a deceased loved one (or a relative in the event you are a legatee of an estate), a disclaimer of inheritance form must be completed and filed with the appropriate probate court. For many people, however, they are not aware that they can often obtain these forms in a downloadable PDF file online.
Downloading a disclaimer of inheritance form in advance may actually benefit your situation in a number of different ways. First, if you are unfamiliar with these forms, you can utilize an available PDF to better understand what information you need to provide. Second, it will give you the opportunity to provide all of the required information for your disclaimer of inheritance in the comfort of your own home. Third, a disclaimer of inheritance form that you can download in a PDF and print at home gives you the opportunity to review and revise in order to avoid common mistakes that could mean legal proceedings in order to get your disclaimer accepted.
This leads into the fourth and final benefit: time. Too often, clients fail to file a disclaimer of inheritance, or file the incorrect disclaimer of inheritance form, which can be time-consuming and expensive to rectify. By downloading and filling out your disclaimer of inheritance form before you submit it, you minimize the chances that you will make a mistake that will delay the process of filing your disclaimer of inheritance.
So where can you find your disclaimer of inheritance form PDF to access at home? A number of websites offer disclaimer of inheritance forms that you can fill out and print at home. However, you have to be cautious — not all websites offer legally binding disclaimer of inheritance forms and some will even charge you for a form that you can download for free. Family LWB offers a free download of a disclaimer of inheritance form PDF through our blog.

Submitting the Form

The following checklist will help you maximize the acceptance of your disclaimer of inheritance form.

• File the form with both the probate court and the county clerk. If the decedent’s estate was opened in Probate Court, the disclaimer should be filed in that court. If the decedent had a trust, the disclaimer should be filed with the county clerk and a copy of the disclaimer should also be filed in the probate court. If the disclaimer is related to community property, the disclaimer should be filed with the county recorder.
• Send a copy of the disclaimer to the successor trustee (trust) or executor (probate) of the decedent’s estate.
• Send a copy of the disclaimer to the beneficiaries who would receive the disclaimed interest if the disclaimer is accepted by the court (if none are listed in the form). This is particularly important if the disclaimed interest is greater than $50,000.00.

The following checklist will help you avoid some of the common problems associated with filing disclaimers:
If you choose to file the disclaimer with the probate court, you must file it within nine months of the decedent’s death. Otherwise , it will be deemed void. If you file a disclaimer with the county clerk, you must file it within 120 days of the decedent’s death. The disclaimer must be notarized and the person the disclaimer is being filed on behalf of must be identified (by signature or printed name). The description for the disclaimor is missing the words "an executed copy" indicating the disclaimer should be based on an existing executed copy. The decedent’s date of birth is missing from the description. The decedent’s date of death is missing from the description. The premarital agreement is missing or did not disclaim the property described in the disclaimer. The disclaimer was not witnessed. The certified signature is missing. The signature of the person who prepared the disclaimer is missing. A representative capacity is selected. The declarations are missing. The preparation date is missing. The third declaration is missing. The fourth declaration has not been completed. The basis for the disclaimer is missing. The basis for the disclaimer does not comply with Probate Code Section 282. The signatures cannot be read. The notary information is missing or incomplete.

Legal Implications and Issues

The legal implications of disclaiming an inheritance are varied. An irrevocable and nonspecifically written waiver of the right to receive an inheritance can have unintended consequences. However, a well-written disclaimer can result in substantial assets being available to other people in the classification.
One common situation is when a spouse disclaims his or her interest in the estate of a deceased spouse. Generally, upon the death of one spouse, the surviving spouse has the right to receive from the deceased spouse’s estate (or from any prior living trusts) all property that was owned by the deceased spouse. However, the surviving spouse has the right to refuse all property. This refusal to receive a property interest is known as a disclaimer. The result of a valid disclaimer is that the property interest which would have passed to the disclaiming spouse will not be included in the surviving spouse’s estate when the surviving spouse passes away.
For example, assume that both John and Sophie have passed away, and that John left Sophie unimproved land in his will. If Sophie disclaims the land, the land is not included in any part of Sophie’s estate when Sophie passes away. This means that the property in the disclaimer (even though it passes to Sophie’s children) will not be subject to any capital gains, income tax, or probate fees when Sophie passes away. In contrast, if Sophie had not disclaimed this property, it would be included in her estate for all purposes, including Capital Gains purposes. Thus, by stating that "I Sophia Smith permanently and irrevocably decline my right to receive all of my husband John’s property," Sophie’s children would save thousands in Capital Gains taxes.
Another common tactic for estate planning with a disclaimer is to supervise what happens to a decedent’s property after his or her death. For example, many people create a trust where their property is held until their children reach a specific age or until specific events occur. Often, these trusts refer to a specific clause that allows the Trustee to pay each child a set amount of money at certain stipulated ages (for example, $10,000.00 per year until age 35). The intent is to wait until the child reaches a certain age before giving him or her any money. So, what happens when one child decides that they want the money while he is 30 years old? In such a situation, the trust would typically contain a clause such as, "Any child shall decline his or her right to receive funds from the trust during his or her teenage years (13 years through 19 years) and his or her twenties (20 through 29 years); otherwise, this Right of Declination shall be revoked."
Under this clause, the Trustee will not allow the child to receive any funds from the trust while he or she is a teenager or in their twenties. Afterwards, the child may exercise his or her right to disclaim his or her interest in the funds, as they are no longer underage. Thus, the Trustee is the only person who has the right to pay out any amounts to the child when it is appropriate, without having to give this right to the child when they are not financially capable of making wise decisions.
A disclaimer can be a smart and sophisticated way to ensure that the assets in a trust or estate plan go to a family member in the best possible fashion. A spouse can use it to keep her spouse’s estate out of her taxable estate. A parent can use it to let their child wait until adulthood to receive his or her inheritance. The disclaiming party loses nothing by declining their interest.

Common Errors to Avoid

Timeliness is key when dealing with the legal process of a disclaimer. Failure to submit the document by the deadline may open the door for unwanted consequences. Some typical pitfalls include:
• Ignoring cut-off times on form… Failure to meet deadlines for disclaiming interest can result in acceptance. In some states, the time frame is as low as 30 days.
• Allowing court involvement… Some situations involve efforts to enforce the disclaimer as if it were part of the legal process—unfortunately, this invites more trouble than it’s worth. Accordingly, it’s advisable to stay out of the courts and leave disclaimers to be settled based on the actions of interested parties.
• Providing financial help… Accepting assets directly after death in any form can cause significant problems when it comes to tax codes. Some of these circumstances are avoidable, but others might require assistance from a tax attorney to unravel.
Disclaiming inheritance is a serious decision that requires careful thought and a clear understanding of the process. Keeping these common mistakes in mind can help you proceed wisely with your disclaimer of inheritance form.

When to Involve an Attorney

Hiring a legal professional is recommended even in the event that you do not anticipate your disclaimer being contested at some point in the future. Experienced lawyers are able to assess your situation during an individualized meeting and review your assets, debts , estate planning, and the potential for future legal challenges related to your disclaimer. Consulting a lawyer is particularly advisable for individuals who have a large or complex estate or who may engage in extensive estate planning prior to filing the disclaimer.