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Should you decline an inheritance?

On Behalf of | Jun 2, 2017 | Estate Planning

Most people think that they’d be lucky to be remembered in someone’s will — but sometimes a bequest turns out to be more of a burden than a blessing.

There are some situations that should make you think twice about accepting an inheritance:

1. You can’t afford it.

This is a problem that happens to a lot of people when they inherit an object of art, a collection or an antique vehicle worth a significant amount of money. The taxes may be more than you can manage. Consult with a financial adviser if that’s a possibility — if you’d have to sell off a family heirloom to cover the taxes, you may want to let the bequest pass to someone else. If selling the collection or property doesn’t bother you, just make certain that you’ll get enough from the sale to make it worth your efforts.

On the other end of the spectrum is property of little to no value that has a lot of past-due taxes attached. If you accept the inheritance, you accept the debt. Sometimes it just makes more sense to let the state have a piece of property that’s just going to be a burden.

2. You don’t want the drama or stress the inheritance will bring.

Maybe you’re the first-born, so Mom and Dad left you the family home but you feel like it should be sold and evenly divided among all their heirs. Alternately, you may be financially well-off — which could make accepting an inheritance of several thousand dollars emotionally uncomfortable when you know a sibling is struggling to keep up a mortgage and pay for a child’s college education. There’s no disgrace in graciously letting an inheritance go to someone who needs it more than you.

3. The inheritance will cause you to lose federal or state benefits that you need.

For example, if you receive Supplemental Security Income (SSI) based on disability, any significant bequest could end up costing you not only your monthly income but your entitlement to medical coverage as well. For example, imagine that your father left you the wooded property that you used to camp on together — if that property has a value of more than $2,000, it could end your entitlement to benefits that you very much need.

To protect yourself, discuss the issue with an attorney before you decide to accept or decline an inheritance.

Source: AARP, “6 Reasons to Reject a Bequest,” G.M. Filisko, accessed June 02, 2017