Can I Disclaim My Inheritance?

beneficiary meeting with attorney about inheritance

How to Disclaim Your Inheritance |

In most cases, when a loved one leaves you something in their Will or Trust, it’s an honor. However, that doesn’t always mean you’d like to inherit the property or assets passed down to you.

There are plenty of valid reasons to disclaim your inheritance, and with the proper legal documentation, you may refuse assets left to you by a loved one who died with a valid Will or Trust, or even if you are an heir-at-law when someone has died without a Will or Trust. Here’s what you need to know about using a qualified disclaimer.


Why would you want to disclaim your inheritance?

You can disclaim a gift or inheritance for any reason, but here are a few of the most common:

  • Inability to maintain the assets left to you. If a loved one left you a sizable asset, such as real estate or a vehicle, you may not be in a position to maintain or manage that asset, even if you planned to sell it. In this case, you may wish to disclaim that asset, so it goes to other named beneficiaries or heirs who are more equipped to handle the situation.
  • Reducing your taxable estate. This is not a likely scenario for most individuals, but in some cases, inheriting assets from a loved one can put you over the federal thresholds for estate tax if you die after inheriting from someone and the inheritance is counted as part of your estate, or trigger hefty inheritance taxes by the local State taxing authorities where you reside. Note – not all States have an inheritance tax, so it is helpful to determine whether you do or do not live in a state that imposes inheritance taxes.
  • Debt/bankruptcy. When a beneficiary is deep in debt or bankruptcy, any inheritance received may be claimed by creditors to cover those debts. If this is the case for you, you may wish to disclaim your inheritance so the assets or property can stay in the family.
  • Honoring the decedent’s true wishes. Perhaps you knew the decedent well and know they did not have a chance to update their Will before they died. If you are receiving an inheritance that would be more appropriate to give to someone else who was in their life, you may consider disclaiming it.
  • You believe you are too old or have an illness where you can’t truly benefit. Perhaps you feel that, at your age or in your medical condition, it is not ideal for you to be the one to inherit from a loved one’s Will or Trust, and you prefer to disclaim the inheritance in favor of other beneficiaries who need it or can make a longer-term use of the inheritance than you may be able to do during your lifetime.

This is not an exhaustive list of all possible reasons for disclaiming your inheritance. You might refuse to accept your inheritance for a variety of other reasons, or even for no reason at all. The choice is entirely up to the beneficiary.

How to decline an inherited asset using a qualified disclaimer

If any of the situations listed above (or another) apply to you, you might consider having an attorney prepare a formal Disclaimer for you and ensuring that it gets filed with the proper court and taxing authority by not later than nine (9) months after the death of the person from whom you are inheriting.  Disclaimers can be partial or full disclaimers.  However, once a disclaimer is completed, you may not benefit from that particular item of the estate (e.g., disclaiming inheritance of a piece of real estate) and you cannot change your mind after the fact. So, if you’re sure you want to disclaim your inheritance, here are the steps you’ll need to follow:

  1. Work with an attorney to have them prepare a proper, formal disclaimer/refusal to accept inheritance in writing, and be sure to sign and notarize it.
  2. Deliver your disclaimer document to the estate’s executor or trustee within nine months of the decedent leaving you the inherited assets or property.
  3. File a copy of the Disclaimer with the local county courthouse where the deceased person resided when he or she died, as well as the Internal Revenue Service (in consultation with a CPA).
  4. Once your disclaimer has been filed, do not accept, directly or indirectly, any benefits or assets from the estate you’re disclaiming. Otherwise, your disclaimer may be rendered invalid and you will be subject to any tax or legal obligations associated with inheriting.

Important nuance: Minor children can have inheritance disclaimed as well on their behalf by a legal guardian or parent; however, these disclaimers may not be legally binding in the eyes of a court unless and until the child reaffirms the disclaimer when they attain eighteen (18) years of age.

If you have any questions about how to prepare a Disclaimer or pros and cons for using disclaimers, consider hiring a local estate planning attorney to guide you through the process. The Law Office of Patricia E. Tichenor, P.L.L.C. has nearly 20 years of experience helping Virginia families with probate/inheritance matters.

Contact us today to discuss your circumstances, or schedule a virtual consultation.

How to Get Help with Estate Plans During COVID-19

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Virtual Estate Planning During COVID-19 |

On March 30, Governor Ralph Northam joined other state governors in signing a temporary stay-at-home order for the Commonwealth of Virginia, through June 10, to fight the spread of COVID-19. Under the order, Virginia residents are not permitted to leave their homes for non-essential purposes, which would include meeting in-person at an attorney’s office to draft or update your estate plans.

Due to the rapid spread of coronavirus, the somber reality is that many people are probably thinking about their will, trusts, powers of attorney, etc. in case they contract COVID-19. However, you don’t have to take the DIY approach. My Legal Case Coach is here to provide legal support for your estate planning needs, all from the comfort of your own home.

How we are supporting clients remotely with their estate plans

During this time you can still get help with your estate planning questions or needs by scheduling a free, live video call with us. We are helping clients by Zoom to get the support they need to get their estate plan created or updated – and can very effectively do so, thanks to today’s technology.

During your free, 30-minute call, we will discuss your estate planning needs and what you’d like to update. This may include:

  • Wills – Your Will is an essential estate planning document that details how your executor should distribute your property after death. There are several different types of Wills, and we can help you determine which is the correct one for your estate to ensure a smooth probate process for your loved ones. We can also update your existing Will in the case of a significant life change.
  • Trust planning – A trust is an arrangement where one or more people, known as a fiduciary, are assigned to hold property or assets for someone else. We can help you create a testamentary trust (established through your Will) or living trust (established through a signed agreement and funded during your lifetime) to make sure your estate is handled properly.
  • Guardianship planning – Guardianship or conservatorship planning is intended to ensure the continued care of your dependents, including young children and older children or adults with special needs. In this case, your estate plan may include signing a Designation of Standby Guardian (think power of attorney for a minor child), seeking to appoint a guardian or conservator, and/or establishing a special needs trust.
  • Power of attorney – A power of attorney gives another person the legal authority to make important medical and/or financial decisions if you become incapacitated and are no longer able to provide informed consent. Without these documents, these decisions could be made by a doctor or a court-appointed agent. We can help with your power of attorney documents to ensure that these important decisions are made by someone who will act in the best interest of you and your family, including signing a Designation of Standby Guardian (think power of attorney for a minor child) to protect your children if you become incapacitated.

What if I need more help?

We are committed to serving our clients throughout this pandemic and beyond. During your consultation call, we can discuss scheduling further video meetings with principal attorney Patricia E. Tichenor to ensure that you are satisfied with your updated estate plans and to provide additional guidance on any new issues you might be confronted with as they arise.

Visit our Calendly page to get started and schedule your free Zoom call.

Your Estate Planning Checklist: 6 Steps to Get Started

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Your Estate Planning Checklist |

Estate planning is an important process that allows you to dictate what happens to your assets in the event of your death or incapacity. While it may seem morbid to think about, especially if you’re young, it’s never too early to start creating an estate plan. Planning ahead will ensure a smooth probate (or probate avoidance) process for your loved ones and beneficiaries, and it may give you peace of mind knowing your wishes are clearly documented if something were to happen. To get started with your estate plan, follow these six steps.

1. Identify and record all your assets.

Your assets include tangible and intangible items. Tangible assets are assets that can be measured physically, such as any furniture or furnishings or other items in your home, your car, or any work tools or equipment you own. Intangible assets are not physical and may include any business licenses, trademarks, digital (social media) assets, or intellectual property you have.

2. Consider risks to assets. 

Certain assets come with risks. For example, if you own a home and you have overdue mortgage payments and property taxes at the time of your death, your estate will need to have sufficient funds to settle those debts. Take a look at your asset list and consider what you can do to mitigate risks that could come from them.

3. Protect your loved ones and name your beneficiaries. 

There are several estate planning arrangements you can put into place to ensure your family and loved ones are provided for in the event of your death. If you are a single parent of minor children, you’ll want to appoint a legal guardian and set up a trust plan (as part of a Will or separately, depending on your goals) in order to provide financial security for them until they reach adulthood. Even if you are married to your child’s other parent, it’s a good idea to name a successor legal guardian to your spouse in the unlikely event that both you and your spouse die before your children have turned 18 years of age.

This is also a good time to think about what assets you want to be passed on to your family and friends. Go down your list of assets one by one and decide on your beneficiaries. Some individuals choose to leave their entire estate to their spouse and children, while others divide up their estate and leave certain assets to specific heirs.

4. Choose your power(s) of attorney. 

Choosing an agent or attorney-in-fact to administer your financial and medical powers of attorney (POAs) is one of the most important parts of the estate planning process. Your agent should be someone you trust to make the best decisions on your behalf, as they will be responsible for your financial and medical decisions should you become incapacitated or are otherwise no longer able to make these important choices for yourself. You can use the same person (your spouse, for instance) or different people to serve in these roles, or perhaps name co-agents depending on your goals.

5. Review local and federal estate tax laws.

If you have a particularly large estate, your executor may be responsible for paying federal estate taxes. To help ease the burden of these expenses, your estate plan should include a review of current federal estate tax laws to determine your estate’s liability. Depending on where our beneficiaries reside at the time of your death, you may also want to brush up on the state inheritance tax laws where your beneficiaries reside.  While Virginia does not impose inheritance taxes on residents who live in Virginia when they inherit, a handful of other states do.

6. Hire an estate planning attorney to help. 

Due to the complexity of estate planning, it’s always wise to contact a professional for help. To get started with your estate plan or update your current plan, contact the Law Office of Patricia E. Tichenor, P.L.L.C. Our firm has nearly 20 years of experience helping Virginia families with creating and updating their estate plans.

DIY Estate Planning: Good or Bad Idea?

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DIY Estate Planning: Good or Bad Idea? |

With the emergence of DIY estate planning software and online tools, you might think you have access to everything you need to easily and affordably prepare your own estate planning documents.

While you can certainly do this, it may not be the best idea to skip the attorney’s office if you want to ensure that your documents are legally binding and properly crafted. Estate planning is a complex process, and mistakes are bound to happen — but many are financially taxing or difficult to fix, especially if they’re not spotted until after your death.  In addition, estate planning often requires knowledge of how the probate process will work after you die and knowledge of how to use particular estate planning documents and tools to avoid or limit the impact of probate on your estate.

While a DIY estate planning approach is often better than not having an estate plan at all, it’s certainly not risk-free. Before you download any forms from a DIY website or purchase a DIY package at a local retail store, here are a few important considerations.

What is DIY estate planning?

DIY estate planning is essentially just drafting your key estate planning documents — your will, your powers of attorney, your advance medical directives, etc. — using templatized forms available online or from a retail store for a fee. While these forms may be a good starting place for listing and organizing your assets, they do not always include the precise language that must be included in a will to make them admissible/valid in the eyes of a probate court.

What can go wrong when you draft your own estate planning documents?

There are many risks of tackling estate planning without legal guidance. Here are few common errors you might encounter:

1. Failure to meet signature requirements

A valid Virginia will must be signed by the testator and at least two witnesses who are not beneficiaries. These witnesses must sign in the presence of the testator, at their direction. Failure to meet these requirements will render your will invalid — and a DIY estate planning tool might not remind you of this requirement the way an attorney would.  In some instances, if one of the witnesses you used is not qualified to serve in that role, this might also render the Will invalid, which is why it is best to use a notary public in addition to the two witnesses.

2. Improperly funded trusts

When forming a revocable living trust, you’ll need to fund it for the trust to be valid. In other words, depending on the purpose of the trust and the types of assets you own, you may need to re-title certain of your assets from your personal name into the name of the trust. If you don’t, your heirs may end up going through probate court and incurring probate taxes that could otherwise have been avoided. An estate planning attorney can offer specific, personalized guidance when creating and funding your trust, in a way that a DIY tool may not.

3. Not accounting for state-specific laws

Every state has different estate planning laws, and it’s crucial you follow them to the letter if you want a probate court to deem your will as valid. Some DIY tools provide generic forms that do not account for certain specific Virginia provisions. Without legal guidance from an experienced local attorney, you might not be complying with the right regulations in your area.

4. Unique situations unfit for DIY

Many situations are too unique for basic DIY estate planning forms. For instance, maybe you have assets in multiple states, or perhaps you have children from a previous marriage, or perhaps you want your home to be preserved as a place for your children to still live with a legal guardian after your death.  Whatever the case, unique situations require unique solutions, not a one-size-fits-all approach and often a will alone is not sufficient to meet your needs.

Why hire an estate planning attorney?

If you choose to handle your own estate planning needs, you may be setting yourself up for unnecessary complications that could impact not only you, but also your executor and your beneficiaries. It doesn’t matter how much time you spend drafting your own estate plan, or how detailed you are — one simple mistake can invalidate your entire will, trust or other legal document.

An attorney can help you avoid the above mistakes and provide guidance for your specific circumstances. No matter how simple you think your circumstances are, a templatized form is unlikely to thoroughly and properly address every person’s exact wishes for their estate.

Bottom line? An attorney can help you craft wills, trusts, powers of attorney, and other estate planning documents that are appropriate for your situation and include the proper language to ensure their validity after you pass away.

Get help with your estate plans

The Law Office of Patricia E. Tichenor, P.L.L.C. has nearly 20 years of experience serving the needs of Virginia families. Contact us today for help with creating or updating your estate plans.

How Do Estate Taxes Work?

two people with laptops and financial worksheets

How Do Estate Taxes Work? |

Tax Day is rapidly approaching, and as you prepare to file your tax return this year, it’s a good idea to also review the current legislation on estate and gift taxes.

While the Commonwealth of Virginia effectively repealed its state-level estate or inheritance tax in 2007, federal estate tax laws still apply to estates of a certain size. For this reason, it’s important to understand how the law may impact your beneficiaries and their future inheritance.

Here are some of the basic facts about estate taxes, including who is expected to pay what, and when.

What is the estate tax?

The estate tax is collected by the IRS from estates of a certain size before assets are distributed to any heirs and beneficiaries. Sometimes called the “death tax,” the estate tax is levied against estates larger than $11.58 million per individual, or $23.16 million per married couple (as of 2020) under a temporary change made to the laws under President Donald Trump’s tax reforms.  In 2021, unless Congress acts to extend these changes, the figure will be reduced to roughly $6 million, with a cost of living adjustment to apply on an annual basis.

The amount your estate will pay is determined by how much larger it is than the federal exemption. For instance, under the Trump tax reforms, an estate that is less than $10,000 above the federal limit will pay $0 in base taxes and a marginal tax rate of 18% on the overage amount, while an estate that is $100,000 above the limit will pay a $18,200 base tax plus 28% on the overage.

Who is responsible for paying estate taxes?

All U.S. estates are subject to federal estate tax law, although most are not large enough to be impacted by current regulations. On the state level, 18 states currently collect their own taxes on the estates of its decedents (as mentioned above, Virginia is not one of them). Several states have recently repealed their estate tax for deaths that occurred after a certain date.

What about inheritance taxes and gift taxes?

Inheritance taxes are paid by an individual who benefits from a decedent’s estate. They are not the same as estate taxes, which are paid by the estate itself.

It’s important to note that inheritance taxes are not imposed by the federal government, and only six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, New York, Pennsylvania) currently collect inheritance tax from its residents. That means if you leave money to a beneficiary residing in one of these states, they will have to pay inheritance taxes on that amount.

Gift taxes, on the other hand, are paid by someone who gifts assets above a certain amount to another person during their lifetime. Read on to learn more about gift tax exclusions and how lifetime gifting can work as an estate planning strategy.

How can I reduce the size of my taxable estate?

If your estate is approaching the federal exemption limit and you want to ensure it stays below that amount, there are a few different strategies for reducing the size of your taxable estate.

One of the most common methods for doing this is establishing an irrevocable trust.  Assets that are transferred through an irrevocable trust, if created five years prior to your death, may not count toward your taxable estate. As an added bonus, these assets are also not subject to the probate process, as they would be if they were passed through a decedent’s Will.

You may also wish to explore inter vivos gifting as an option for reducing your estate size during your lifetime. Gifting is when one person completely and irrevocably transfers assets to another, and the giver does not receive anything in return.

Gift amounts that fall within the current federally-allowed limits of $15,000 per person, per calendar year are completely tax-free. That means if you gift $15,000 to each of your children over the course of one year, they will not have to report it as income or pay taxes on it to the IRS. For spouses, this means you could give your children a combined gift of $30,000 in any calendar year, tax-free. Any amount over this is considered non-exempt, and you and your recipient will have to pay taxes on that amount.

As long as your non-exempt lifetime gifting – the combined amount that you give away prior to death and leave to others after death – does not exceed the current $11.58 million federal limit, you can effectively use this strategy to reduce your taxable estate over time, while still ensuring that your desired beneficiaries receive their inheritance money.

Still have questions? Ask an experienced estate planning attorney.

Estate planning can be confusing, and it’s not always clear how to best structure your plans to minimize the tax burden and maximize your beneficiaries’ inheritance. No matter how large or small your estate, the Law Office of Patricia E. Tichenor can help.

We’ve been assisting Virginia residents with wills, trusts, and other estate planning needs since 2001. We’ll work with you to review your assets and create the ideal plan for your needs. Contact us today and let’s start planning for your family’s future.

The Law Office of Patricia E. Tichenor, P.L.L.C.
Professional Legal Services or Legal Representation
(703) 669-6700


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