Can I Refuse an Inheritance or an Appointment When a Loved One Dies?

By Lane V. Erickson, Idaho Estate Planning Attorney

In an ideal world, the things that are written in a person's estate planning documents, such as a last will and testament, are how things are done when that person passes away. The problem is, we don't live in this kind of the world. We live in a world that has complications, and problems, and circumstances that make things turn out differently than sometimes we hope they will. This is true when it comes to either gifts that are given or appointments that are made in a person's last will and testament.

I know it may sound crazy, but there are actually some times when a person may not want to receive an inheritance or accept an appointment or be given an insurance payout through the probate, trust or life insurance documents of a family member or loved one who passes away. Remember, life isn't ideal. Sometimes the complications and circumstances in life make it so that these things would be more of a problem for us than rejecting them.

At the Racine Law Office, our premier Idaho estate planning attorneys have worked with each individual client to determine what will be best for their particular circumstances. Our goal is to help our clients what we do best for each of them individually. I personally seen circumstances where allowing a person to give up a gift that is given to them or reject an appointment were they have been named would be a bigger problem for them in their own lives. When this happens, I have no problem in helping these clients avoid these gifts or appointments.

So, what are some of these unique circumstances that may make it more enticing for a person to reject these gifts and appointments than to accept them? There are a number of things that could affect them. The purpose of this article is to discuss some of these circumstances and then to discuss how the gift or the appointment can be legally rejected.

Keep in mind that this article is not exhaustive on this topic. Rather, it is a starting place for you. If you have questions or concerns for yourself and your situation, we encourage you to contact us so that we can discuss your particular circumstances and help you decide what would be best for you individually.

The first place to start is with inheritance. An inheritance can be disclaimed by any individual. Why would anyone ever want to do this? There are a number of reasons this could happen. For example, suppose that you are disabled and you are receiving benefits from a federal, state, or local government agency. The eligibility requirements to continue receiving these benefits are usually extremely limiting on the amount of money and property you can own or possess at any given time. If you receive an inheritance of money, you made no longer be eligible for those benefits and you may lose them. Worse, you may even be required to pay some benefits back.

Additionally, suppose that you either are already in or about to file bankruptcy because of your financial situation and the inheritance isn’t enough to solve your financial problems. Within some parameters required by federal bankruptcy law, an individual does have the ability to disclaim an interest in an inheritance. Doing this would keep all the money or property from the estate going to the trustee in the bankruptcy to be distributed to creditors.

Finally, although this may be difficult to believe, there are some people that simply don't want an inheritance from another individual either because of their own financial situation or because of the bad relationship that existed with the person who passed away.

Whatever the reason, Idaho law specifically allows an individual to disclaim any interest in an estate that is made to them. The reasoning behind this is that a distribution made from an individual's estate after they pass away is the same as if that individual tried to give this gift while they are alive. No person is forced to accept any gift. Because of this, a gift given, even after a person has died, is not a requirement. The person has the ability to disclaim the gift if they choose.

Similarly, no person can be forced to accept any appointment that is created by a person's estate planning documents. These documents could be a last will and testament, a trust, powers of attorney or any other type of document. It's for this reason that I usually suggest to individuals who are creating an estate plan that they talk with the person they want to appoint to make sure they are willing to act in the capacity in which they will be appointed.

If a person does choose to renounce an appointment that's given to them, Idaho statutes provide the specific instructions on what they need to do. According to Idaho Code 15-3-203(b)(2)(c) all they need to do is file an appropriate writing with the court that indicates they are renouncing the appointment.

So why would anyone want to do this? This is an easier one to answer. Accepting an appointment to be a personal representative, or a trustee, or to hold the power of attorney over someone else requires a good deal of effort and time. The state of more simply, it's not an easy job to do. Because of this, a person may not physically be capable of doing it. Or, the person's life circumstances such as work or other family may require most of their time making them unable to perform these functions. Additionally, a person may simply just not want to do it.

Whatever the reason is, it's important to know that a person cannot be forced to accept this kind of appointment. Each individual who receives an appointment has the ability to renounce that appointment if they choose to do so.

This is one of the main reasons that I suggest to individuals that they review and update their estate planning regularly. You may have chosen someone to act as your personal representative after you pass away. At the time you did this this person may have lived close to you and may have had a good relationship with you and been willing to act in this capacity. However, time may go by in this person may become disabled, or they may move away, or their relationship with you may change. If any of these things happen it's a good reason to update your estate planning and to make a change as to who you appoint as your personal representative. If you don't do this, the individual you may be relying on me simply renounce that appointment.

The last thing that we will discuss is being named as a beneficiary. Like the other two items listed above, no person cannot be forced to accept this kind of a designation. If you are named as a beneficiary on another person's life insurance or on their retirement accounts or on some other type of financial account, you still have the ability to wave your interest as a beneficiary.

If a person whose name is a beneficiary waves their interest as a beneficiary, the law that requires the insurance company or account administrator to treat that individual as if they had died before the person who had owned the insurance or the account. This means the insurance company or account administrator is required to look to the next listed beneficiary and make a distribution to them instead.

It's true that it may be hard to believe that someone would want to disclaimed a distribution of money property or assets from an estate or from an insurance or retirement account. However, there are circumstances where this can and should be done. If you have questions about your own estate planning, or your designation as a beneficiary or an appointee in someone else's estate planning documents, we can help.

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.