Can Someone Refuse an Inheritance in New York

A beneficiary of a New York estate can refuse an inheritance and renounce all or a portion of what was left to them. Nobody can be forced to accept a dead relative’s assets. But one common reason for refusing does not work: being left an inheritance can disqualify a person from government assistance such as Medicaid even if the person refuses to receive it, so if that is why you are planning to disclaim, it will probably not help.

Why Someone Would Refuse an Inheritance

The reasons vary. An older beneficiary may disclaim to avoid paying estate tax twice, once when they receive the inheritance and again when their children receive it from them; this may or may not work. Someone who is already wealthy may refuse so as not to increase the value of their own estate. A beneficiary who is being sued may want to keep the asset out of the reach of creditors. A beneficiary may simply want the asset to go to another family member who needs it more. And some people hope to avoid being disqualified from federal financial aid, such as a student loan or grant for college. The caution above applies to that last group: in New York, refusing an inheritance is treated by Medicaid as a transfer of assets, which can create a penalty period of ineligibility even though the heir never received the money.

Refusing an Inheritance Will Probably Not Help You Qualify for Medicaid, SSI or Food Stamps

If you are refusing an inheritance in order to qualify for a government benefit such as Medicaid, food stamps or SSI, speak to an attorney first. The agencies treat being left an inheritance as a disqualifying event even if the person chooses to be skipped and lets the inheritance go to their children. The reasoning is that someone who has a chance to pay their own expenses and refuses to do so is no longer the government’s responsibility, and that a person who renounces in favor of their children is really keeping a beneficial interest in the property through them, which the benefit rules do not allow.

The IRS Qualified Disclaimer Rule

Under the IRS rules, a qualified disclaimer must be made in writing and filed with the executor within nine months after the decedent’s death, and before the beneficiary receives any portion of the inheritance or takes control of the asset. The inheritance is then treated as if the beneficiary had died before the decedent, and it reverts to the estate. The will dictates who receives the disclaimed share; the disclaiming beneficiary has no say in it, and the disclaimer cannot be revoked. If the decedent died without a will, New York’s intestacy law determines who is entitled to the assets, so a refused inheritance goes to the next person in line under that law. The New York statute governing renunciations is EPTL 2-1.11.

Before You Disclaim

Before deciding to refuse an inheritance, consult a New York City probate and estate attorney. The attorney can prepare the disclaimer and fit it into your other estate planning, and can also represent the estate, the executor or any other interested party in related matters. To speak with a New York City estate attorney, call the Law Offices of Albert Goodwin at 212-233-1233 or email [email protected].