Refusing a Bequest

On occasion, a beneficiary may choose to reject a bequest. When a beneficiary does not want to accept an inheritance, there is usually an understandable reason. A beneficiary may have a financial or a personal reason for refusing a bequest. If you are considering rejecting a bequest from a will, you should first seek legal advice. This article explains what a beneficiary should do if they do not want to accept an inheritance.

Personal Reasons

There may be a personal reason for a beneficiary not to want an inheritance. The beneficiary may have a complicated or painful history with the testator. In light of this history, the beneficiary may feel unable to accept the bequest. A beneficiary in this situation may choose to reject a gift but should take time to make the decision and be sure to consult with the executor.

Financial Reasons

A beneficiary may not want an inheritance for financial reasons. A person who has considerable existing wealth may prefer someone else to benefit from a modest inheritance. A beneficiary may also not want to deal with the tax liability that comes with a substantial testamentary gift.

Sometimes a beneficiary does not want an inheritance because of the effect it will have on their eligibility for social security payments. In that case, the person may want to rethink their decision, as the rejection of a testamentary bequest may be considered a disposal under social security law. Centrelink only allows a pension recipient to give a certain amount each financial year for up to five years. A rejected bequest is likely to be considered a gift, and if a beneficiary who is a Centrelink recipient gives away income or assets over the set amount, it will count towards their income and asset test.

Inconvenience

Sometimes, a testator will bequeath a gift because it is simply more trouble than it is worth. For instance, a testator may gift a pool table to a person, hoping that they will enjoy playing with the gift. The beneficiary may not want to go to the trouble and expense of arranging for delivery of the item. The beneficiary may not have room to store the item. In a case like that, the beneficiary may simply choose to reject the bequest and avoid the associated inconvenience.

When a testator leaves a pet to a beneficiary in their will, there is always a danger that the beneficiary will refuse to take the animal as they may not be able or willing to have a pet. It is always prudent for a testator to name a secondary beneficiary for pets. The testator should also consider leaving a cash bequest to this person to cover the costs of looking after the animal.

Declining An Inheritance

Under Australian law, a beneficiary who does not want to accept an inheritance has the option of refusing a bequest. When this occurs, the executor and the beneficiary can sign a legal document that disclaims their interest in the deceased estate. The executor can then give the gift to the next eligible beneficiary.

The executor should consider the following legal points;

1. The beneficiary cannot disclaim the gift before the testator dies.

2. The beneficiary must refuse the gift by deed (in writing and conduct).

3. The beneficiary cannot disclaim the inheritance after previously accepting the gift.

4. The beneficiary cannot retract this disclaimer if other parties have relied on their refusal of the gift.

If the testator made the will in a foreign country, the beneficiary needs to check their right of refusal under that country’s law.

Deed Of Family Arrangement

A beneficiary who is considering refusing a bequest can enter into a deed of family arrangement. This document outlines an agreement to change the terms of a valid will. All interested parties must sign the deed of family arrangement. All parties that sign the deed must be adults with mental capacity who agree to the terms of the deed.

A deed of family arrangement may, for example, redistribute the assets of an estate to reflect the financial needs of individual family members. If a parent has died and left their estate in equal shares to their children, the children may agree to redistribute the estate so that the person in greatest financial need receives the estate. It is important to note that a person cannot use a deed of family arrangement in a way that goes against public policy (for instance, to avoid a Family Provision Claim).

There are several legal ways that a person can renounce an inheritance. A beneficiary who does not want to accept an inheritance may choose to decline the gift by individual deed or by deed of family arrangement. Whatever the reason for wanting to reject the bequest, the beneficiary should seek legal advice to ensure that they will not be held responsible for the gift, asset or debt. 

If you require legal advice or representation in any legal matter please contact Go To Court Lawyers. 

Author

Nicola Bowes

Dr Nicola Bowes holds a Bachelor of Arts with first-class honours from the University of Tasmania, a Bachelor of Laws with first-class honours from the Queensland University of Technology, and a PhD from The University of Queensland. After a decade of working in higher education, Nicola joined Go To Court Lawyers in 2020.
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