A beneficiary of a New York estate can give up their inheritance and renounce all of a portion of their inheritance left to them after their loved one has passed away. However, it is possible that being left an inheritance will disqualify a person from being eligible for government assistance such as Medicaid, even if they did not receive the inheritance. So if that is the reason you are planning to disclaim, it may not work – speak to an estate lawyer.
If you really do not want your loved one’s assets, you cannot be forced to accept them. Reasons why someone wants to give up their inheritance may vary:
- Avoid Paying Estate Taxes Twice – Older individuals disclaim their inheritances to avoid paying estate taxes twice – once when they receive the inheritance and again after their children receive it (this may or may not work).
- Avoid Increasing the Value of Your Own Estate – Similarly, they may disclaim an estate so as to not increase the value of their own estate, if they are already wealthy.
- Avoid Creditors – avoid the possibility that creditors may receive the asset if a beneficiary is involved in a lawsuit.
- Help Needier Family Members – to help another family member or beneficiary who could benefit more from receiving the asset.
- Avoid Being Disqualified from Aid or Benefits – to avoid being disqualified from receiving other federal financial aid such as a student loan or grant for college. A word of caution, though – in New York, being an heir to an estate disqualifies a person from receiving Medicaid even if a disclaimer is made.
Disclaiming an Estate Will Probably Not Help Qualify for Medicaid or other Government Benefits Such as SSI or Food Stamps
For those who are giving up an estate to qualify for government benefits such as Medicaid, food stamps or SSI, you should speak to an attorney. The thing is, many government agencies consider being left an inheritance a disqualifying event, even if a person chooses to be skipped and have the inheritance go to their children. The rationales for this are: if someone has a chance to pay for their own expenses but gives it up, it’s no longer the government’s responsibility. Also, the government agencies are concerned that since a person gave up a part of the estate by renouncing it, they are really holding beneficial interest in it through their children, which is not something that is approved by government benefit rules.
IRS Qualified Disclaimer Rule
Under the IRS rules, a qualified disclaimer of an inheritance must be made by the beneficiary by filing a written disclaimer with the executor of an estate within 9 months after the death of the decedent. The disclaimer must be made before the beneficiary receives any portion of the inheritance or takes control of the asset. The inheritance is treated as if the beneficiary predeceased the decedent of the estate and it will be revert back to the decedent’s estate. The provisions of the will then dictate who receives the beneficiary’s share. A beneficiary has no control over who gets the beneficiary’s share. A disclaimer cannot be revoked.
If the decedent died without a will in NYC, then the New York intestate laws of succession would apply as to who is entitled to receive the assets of the decedent’s estate. So in this instance, your disclaimed inheritance would go to the next person in line to inherit under New York intestate law.
Before you decide to disclaim your inheritance, you should consult with a New York City probate and estate attorney. The attorney can prepare the disclaimer to help you with other estate planning needs. A New York probate and estate attorney can also represent an estate, the executor or any interested party to an estate in connection with any other estate matters.
If you wish to speak to a New York City estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233.