Should you “disclaim” an inheritance you don’t want?

Every year, people inherit things from well-meaning family members they have no use for. Most of these things can be easily sold, given to charity or stored away. 

That’s fine for sets of China, a collection of pocket watches or a hideous sculpture. However, what if you’ve inherited a house, a boat or something else you have no use for and don’t want to spend the time and money it would take to sell it? If it’s located hundreds of even thousands of miles away, it can be even more challenging to deal with.

Nevada law addresses the disclaiming of property

You have the option to decline or “disclaim” an inheritance. States have their own “property interests” laws regarding disclaiming property. Nevada law states in part, “A person may disclaim the interest or power even if its creator imposed a spendthrift provision or similar restriction on transfer or a restriction or limitation on the right to disclaim.”

You will need to formally disclaim the asset by notifying the executor of the estate or, if there isn’t one yet, the probate court and complete the appropriate paperwork. Note that you typically can’t disclaim an inheritance once you’ve used it. 

If there’s a contingent beneficiary listed in the will or other estate document, it will go to that person or entity. Otherwise, it will return to the estate. For tax purposes, it’s as though you never inherited it.

Can you give it to another family member?

You can’t disclaim it and decide whom it goes to in your place. If someone else in the family wants the item you inherited, you can accept the inheritance and then give it to them. Family members do this all the time. However, if it’s a valuable asset like a home, boat or expensive piece of art, it’s important to determine the tax implications of gifting it.

Before deciding to disclaim an inheritance, it’s wise to determine what your options are and what would be involved in accepting it. Maybe it’s valuable enough that it’s more than worthwhile to spend a bit of time finding a buyer for it. It’s best to get some legal guidance so that you can make the best decision for yourself and handle things according to the law.

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