There Are Steps You Can Take to Successfully Reject Inherited Assets
The question that came up recently with one of our clients: can you refuse or disclaim an inheritance?
There may be many reasons an intended beneficiary decides to disclaim an inheritance. Our law permits an intended beneficiary to simply refuse the gift. The purported gift is then deemed void ab initio (from the beginning). It becomes as if the gift had never been given.
If you disclaim an inheritance it will stay as part of the deceased’s Estate and will be re-distributed. The problem with this is that you have no control over where the asset goes. It could pass to someone who you would prefer not to receive it.
Also important in the decisions to disclaim. The disclaimer must be executed within two years of the testator’s death, and the disclaimer must not be made for any consideration in money or money’s worth (i.e. you cannot sell your inheritance).
In Ontario there is a common-law rule of thumb that the Executor of the Estate has one year from the date of death to wrap up the Estate; that is collect all Estate assets, pay all Estate debts and liabilities, and distribute the Estate remaining assets to the beneficiaries.
A Deed of Variation can be used to allow beneficiaries named in a Will or under the intestacy rules to alter their distributions from an Estate. A gift, or even part of a gift, can be redirected by a Deed of Variation to another individual, trust or charity as if it had been left to them by the deceased.
I am sure you wonder why people would not want to inherit money from an Estate but we often see siblings that are financially stable often wanting their siblings with less economic advantage to be rewarded. We also sometimes see the family member with the lowest income being the one to receive the inheritance as they will pay lower taxes on the inherited income. The reasons are numerous and one more time it reinforces the need for legal support as your family goes through the decision process of executing a family member’s Estate.
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Contact me at Peter@SmartWills.ca
By telephone 416-526-3121
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This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.