If someone offered you an inheritance, your natural instinct might be to say “Yes, please!” But in certain situations, declining an inheritance could actually be the wisest choice — for you, your taxes, and your long-term financial plan.

This strategy is called a disclaimer. It’s not for everyone, but when used correctly, it can help:

• Reduce taxes for you or your heirs
• Keep assets in the family while avoiding unnecessary complications
• Protect eligibility for certain government benefits
• Streamline your own estate planning

At Richmond Brothers, we’re passionate about helping our clients live fearlessly into and beyond retirement. That means preparing for all scenarios — even the ones you may not have thought about yet.

Let’s explore why someone might decline an inheritance, how the process works, and what steps you need to follow to do it right.

What Is a Disclaimer?

A disclaimer is a formal, legal refusal to accept an inheritance (or a portion of it). Instead of taking the assets yourself, you pass them directly to the next beneficiary in line — often a child, grandchild, or charity.

Think of it as a detour: you’re not stopping the flow of wealth, just redirecting it.

Examples:

• Disclaiming an IRA so it passes directly to your children
• Redirecting property to a sibling who could make better use of it
• Declining assets that would push you into a higher tax bracket

The key is that the decision must be intentional, timely, and handled correctly — or you could lose the ability to disclaim.

Why Decline an Inheritance?

While turning down money or property might sound strange, here are common reasons people choose to do it:

1. Tax Efficiency
   Sometimes accepting an inheritance means a higher tax bill — both now and in the future. Disclaiming can help reduce income, capital gains, or estate taxes for yourself or your heirs.
2. Estate Planning Goals
   You may already have enough assets and prefer the inheritance to go directly to the next generation. This avoids adding more to your own estate and potentially triggering estate taxes later.
3. Government Benefits
   If you or a loved one receives needs-based benefits (like Medicaid), an inheritance could impact eligibility. A disclaimer can prevent disruption to those benefits.
4. Family Legacy
   Passing assets directly to children or grandchildren can sometimes be more beneficial than receiving them yourself.

The Rules: 5 Key Steps for Planning a Disclaimer

A disclaimer must follow strict legal guidelines — and the IRS lays out these requirements in Publication 559. Here’s a simplified version of Ed Slott and Company’s “Planning for a Disclaimer in 5 Easy Steps” — you can download the full guide below for more detail.

1. Name Contingent Beneficiaries
   Without them, disclaimed assets could bounce back into your estate — defeating the purpose.
2. Don’t Touch the Assets
   If you take a distribution or make changes to the account, you may no longer be able to disclaim (some exceptions apply).
3. Work With an Estate Planning Attorney
   Disclaimers are legal documents, and state laws vary.
4. Meet the Deadline
   You generally have nine months from the date of death to file a disclaimer (or nine months after turning 21, if younger).
5. Understand It’s Final
   Once you disclaim, you cannot change your mind.

Why This Matters for You

Whether you’re creating your own estate plan or preparing to inherit, understanding disclaimers gives you more flexibility and control. Done thoughtfully, they can:

• Reduce taxes for future generations
• Avoid unintended consequences
• Keep assets aligned with your wishes

Our advisors at Richmond Brothers are members of Ed Slott Master Elite IRA Advisor Group, trained by America’s IRA Experts to stay on top of the latest strategies. We’re here to guide you through the decision-making process so you can feel confident every step of the way.

📄 Important Note:
If you disclaim all or part of an inheritance, you cannot choose where the funds go. They will pass to the next beneficiary previously named by the deceased, according to their estate plan or account beneficiary designations.

Ready to Learn More?

You can download the full Ed Slott guide — Planning for a Disclaimer in 5 Easy Steps — for a quick, clear resource to help you understand the ins and outs before making any decisions.

Or, if you’d like to discuss your personal situation:
📞 Call us at 517-435-4040
📧 Email us at questions@richmondbrothers.com

We’ll help you explore whether a disclaimer makes sense for you — and ensure your financial plan stays on track, no matter what surprises come your way.