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Disclaiming an inheritance in California

On Behalf of | May 31, 2024 | Estate Planning |

Disclaiming an inheritance in California is a legal process wherein an heir or beneficiary refuses to accept an inheritance or gift from an estate. This process can be a strategic decision for various reasons, including tax implications, creditor issues or personal preferences. 

Understanding the procedure and implications of disclaiming an inheritance is important for anyone who is trying to make an informed decision in this regard.

Common reasons to disclaim an inheritance

Inheriting assets can sometimes result in significant tax liabilities. By disclaiming the inheritance, the asset can pass to another beneficiary, potentially reducing the overall tax burden on the estate or aligning with better tax planning strategies.

If an heir or beneficiary has substantial debts or is facing bankruptcy, accepting an inheritance might expose the assets to creditors. Disclaiming an inheritance allows the assets to pass to another beneficiary who can protect them from being claimed by creditors.

Additionally, for individuals receiving government benefits, such as Medicaid, an inheritance could disqualify them from receiving these benefits. Disclaiming the inheritance can help them to maintain eligibility for essential support programs.

Finally, sometimes, an heir or beneficiary might feel that another family member or beneficiary is more deserving or in greater need of the inheritance. Or they may simply dislike what they’ve been gifted. Disclaiming allows the asset to pass to the next eligible beneficiary according to the estate plan at issue or intestate succession laws.

The legal process of disclaiming an inheritance

In California, the process for disclaiming an inheritance is governed by the California Probate Code. The steps involved include the following:

  • Timely action: A disclaimer must be made within nine months of the decedent’s death or the date the inheritance becomes irrevocable. 
  • Written disclaimer: The disclaimer must be in writing, signed by the disclaimant, and declare the intent to refuse the inheritance. It should describe the specific property or interest being disclaimed.
  • Filing with the probate court: The written disclaimer must be filed with the probate court handling the estate. Additionally, a copy should be provided to the executor or administrator of the estate.

Ultimately, when an inheritance is disclaimed, it is as if the disclaimant predeceased the decedent. The property then passes to the next eligible beneficiary according to the will, trust or intestate succession laws.