When Less Is More: Can You Say No to An Inheritance?

At first glance, saying yes to an inheritance seems like a no-brainer. Yet, it’s not always that straightforward.

Inheritance is a concept woven into the fabric of society, often seen as a symbol of financial security and a bridge between generations. But a surprising trend is on the rise – consciously choosing to decline an inheritance. This shift in perspective is sparking intriguing discussions about why some people decide to step away from their familial legacies.

Take Rita Marsham, for example. The daughter of the late Kenyan politician Nicholas Biwott, one of Kenya’s wealthiest individuals, turned down her share of her father’s estate in late 2023, choosing instead to donate it to other beneficiaries.

Then there’s Princess Catharina-Amalia of the Netherlands, the heir apparent to the throne, who also declined her inheritance. Her reason? She preferred to earn her way and contribute to society before enjoying the financial advantages of her royal status.

Let’s dive into why some people might decline an inheritance and the complexities and benefits that come with such a decision. 

Reasons to Decline an Inheritance

Here are some of the reasons why some people can say no to an inheritance:

  • Tax implications: Accepting a significant inheritance may push you into a higher tax bracket. In such cases, disclaiming part or all of the inheritance becomes a strategic financial decision.
  • Family considerations: If you feel that a sibling or another family member could benefit more from the financial support, stepping aside can be an act of generosity.
  • Financial security: This decision reflects a sense of responsibility and ensures that the resources go where they are needed the most.
  • Honoring the deceased’s wishes: If there were discussions or indications that the deceased wanted assets distributed differently, disclaiming becomes a way to honor those intentions.

You have nine months from the passing of the deceased to file a disclaimer. Once you do, the inheritance will pass on to the next beneficiary. It’s important to note that once you have disclaimed the inheritance, you do not get to choose who it passes on to.

If you don’t need your inheritance but would like to choose where it goes instead, you can collect it and then donate it instead. 

Challenges of Disclaiming Inheritance

While the benefits of declining an inheritance might be clear, the decision comes with its set of challenges:

  • Family dynamics: If you’re thinking about disclaiming, be prepared for potential family tensions. Communicating openly about your decision can help manage expectations and reduce misunderstandings among loved ones.
  • Emotional stress: Acknowledge that disclaiming an inheritance might come with emotional stress, particularly if there are complex family dynamics or expectations from the family.
  • Legal complexity: Navigating the legal process can be tricky, especially if you’re unfamiliar with Estate laws. Taking the time to understand the requirements in your jurisdiction is crucial to successfully disclaiming an inheritance.
  • Potential tax implications for subsequent beneficiaries: Keep in mind that once you disclaim, you won’t have a say in who the next beneficiary will be. If you have specific preferences for the distribution of assets, this lack of control could be a challenge.
  • Unforeseen future financial needs: While you may feel financially comfortable now, think about potential future needs. Unexpected expenses or changes in your circumstances could challenge your initial decision to disclaim.
  • Impact on overall Estate Plan: Disclaiming can have implications for the broader Estate Plan, as it may affect the distribution of assets and could require adjustments to existing plans. Seeking advice from professionals is advisable in this situation.

In contemplating whether to disclaim an inheritance, being aware of these challenges can help you make a well-informed decision that aligns with your values and priorities.

Yes or No?

In the end, the question becomes not just about financial gain but also about the broader implications on family dynamics, emotional well-being, and the legacy one wishes to leave behind. 

Sometimes, saying no to an inheritance can be a powerful statement about individual values and the desire to contribute to a more meaningful and purposeful legacy. It’s important to remember that accepting and disclaiming your inheritance are both valid decisions under different circumstances. 

Based on your personal situation, we can help you make the best decision. 

So, if you are considering saying no to your inheritance or are curious about the process, reach out to us to learn more!