For many Louisianans, writing a will or funding a trust is the first step toward establishing a long-lasting, intergenerational legacy. While testators often go to great lengths to ensure that their heirs stand to benefit from whichever gifts they may be bequeathed, not everyone wins when they receive news of an impending inheritance. However, even when people have compelling reasons to refuse an inheritance, the can have far-reaching consequences.
Common Reasons to Refuse an Inheritance
Even if a sizeable inheritance could improve your financial standing, you may still have compelling reasons to refuse it. While everyone has different reasons to reject a gift, you might have considered turning down an inheritance if you have concerns about:
- Estate taxes. Louisiana, like most states, does not have a state-level inheritance tax. However, the Internal Revenue Service still expects a share of certain high-value estates. If a substantial gift would push your net worth closer to the taxation threshold, you might consider rejecting an inheritance to protect your own heirs from receiving an unexpected bill from the federal government.
- Government aid. Eligibility for many government assistance programs, including Medicaid, can be affected by an applicant’s income and net worth. Since millions of Americans either rely on government benefits to overcome a disability or expect that they may need assistance later in life, declining a large inheritance could ensure that you and your loved ones do not lose access to a much-needed safety net.
- Maintenance. Some estate assets, such as an old home or classic motor vehicle, may require a significant investment to restore or return to working condition. If the anticipated costs of maintenance exceed the potential rewards of accepting a gift, heirs may feel it is in their best interests to let the asset pass to someone else.
What Happens When You Refuse an Inheritance
If you have a compelling reason to refuse an inheritance, you may not be able to exercise any control over who eventually receives the gift intended for you.
While many Louisianans hope that they can simply request that their share of an estate be bequeathed to their own children, the Bayou State’s probate courts will not typically honor such requests.
How Unclaimed Gifts Are Distributed
- The decedent’s contingent beneficiaries. Some testators include contingent—or alternate—beneficiaries, who may receive a gift if the intended heir either refuses the inheritance or passes away before the estate is probated. However, the contingent beneficiary need not be related to the original beneficiary.
- Louisiana’s intestacy laws. When someone passes away without a will, trust, or another estate plan, they are said to have died “intestate.” Louisiana’s Code of Civil Procedure defines how an intestate should be distributed in the absence of a will. In general, intestate successions favor the deceased person’s closest living relatives.
How an Intestate Succession Could Affect an Estate
If you refuse an inheritance and the decedent did not appoint an alternate beneficiary, your share of the estate could be distributed according to Louisiana’s intestacy laws. Depending on your relationship to the decedent, these laws may not benefit your children or other family members.
Intestate successions tend to favor the deceased person’s closing living relations in this order:
- If the decedent had children but no spouse, their children inherit the refused assets.
- If the decedent had a spouse but no children, parents, or surviving parents, the spouse inherits the refused assets.
- If the decedent had surviving parents but no children, spouse, or siblings, the parents inherit the refused assets.
- If the decedent had surviving siblings but no children, spouse, or parents, the siblings inherit the share of the inheritance.
- If the decedent had both children and a spouse, the spouse retains a lifelong interest in the deceased person’s community property, whereas the children inherit it—along with the decedent’s separate property—upon the death of the surviving spouse.
Under certain, limited conditions, intestate assets could be gifted to more distant relatives, including grandchildren, uncles, aunts, and even cousins.
Contact a Louisiana Succession Attorney Today
While you may feel you have no choice but to refuse an inheritance, a Louisiana succession attorney can help you explore alternate strategies to retain a gift and provide for your loved ones without increasing your tax liability or limiting your eligibility for government benefits. Please call Scott Vicknair Law at 504-264-1057 to speak to a legal professional, and schedule your consultation as soon as possible.