# Are you legally required to accept an inheritance? How about a gift? **URL:** \ **Category:** Factual Questions\ **Created:** [December 19, 2012, 4:51pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540 "2012-12-19T16:51:38Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Banana\_Pancake\_Flipper](https://avatars.discourse-cdn.com/v4/letter/b/ce7236/32.png) [@Banana\_Pancake\_Flipper](https://boards.straightdope.com/u/Banana_Pancake_Flipper)\ **Post date:** [December 19, 2012, 4:51pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/1 "2012-12-19T16:51:38Z")
Real question: If someone is named as a beneficiary in a will, are they legally required to accept the property and/or assets from the estate? Hypothetical example: Child is planning on filing for bankruptcy but hasn’t yet, parent unexpectedly dies. Parent names child as beneficiary, child stands to inherit substantial assets but not nearly enough to cover debts. Inheritance would be completely eaten up by creditors. Child’s children (parent’s grandchildren) are specifically named as sucessor beneficiaries in parent’s will. Child would rather disavow (disown? renounce? not take?) their inheritance and rather let it pass directly from parent’s estate to the grandchildren. Is child REQUIRED to take their inheritance? (General answers appreciated, actual legal advice not sought, if the answer(s) depend on state law let’s pick Pennsylvania just for kicks and giggles.) Thanks!! ---
**Author:** ![cwthree](https://avatars.discourse-cdn.com/v4/letter/c/9de0a6/32.png) [@cwthree](https://boards.straightdope.com/u/cwthree)\ **Post date:** [December 19, 2012, 5:01pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/2 "2012-12-19T17:01:29Z")
> [@Banana\_Pancake\_Flipper](#): > > Real question: If someone is named as a beneficiary in a will, are they legally required to accept the property and/or assets from the estate? > > Hypothetical example: Child is planning on filing for bankruptcy but hasn’t yet, parent unexpectedly dies. Parent names child as beneficiary, child stands to inherit substantial assets but not nearly enough to cover debts. Inheritance would be completely eaten up by creditors. Child’s children (parent’s grandchildren) are specifically named as sucessor beneficiaries in parent’s will. Child would rather disavow (disown? renounce? not take?) their inheritance and rather let it pass directly from parent’s estate to the grandchildren. Is child REQUIRED to take their inheritance? > > (General answers appreciated, actual legal advice not sought, if the answer(s) depend on state law let’s pick Pennsylvania just for kicks and giggles.) > > Thanks!! Obligatory statement: IANAL In my experience, no. It’s possible to “disclaim” a portion of an inheritance, which allows that portion to pass to whoever is next in line. In your hypothetical case, the child could disclaim the inheritance, and the assets would pass to the next person in line, probably the grandchildren. For example, when my Mom’s parents died, their will left some money to my Mom. Mom didn’t need all the money and she wanted us kids to have the use of it instead of waiting to inherit it from _her_. She disclaimed some of the money, and the executor transferred it to the kids. My mom paid taxes on the portion of the inheritance that she accepted, and us kids paid taxes on the portion that passed to us. ---
**Author:** ![bizerta](https://avatars.discourse-cdn.com/v4/letter/b/3be4f8/32.png) [@bizerta](https://boards.straightdope.com/u/bizerta)\ **Post date:** [December 19, 2012, 5:15pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/3 "2012-12-19T17:15:41Z")
> [@Banana\_Pancake\_Flipper](#): > > Real question: If someone is named as a beneficiary in a will, are they legally required to accept the property and/or assets from the estate? … No. However, it’s either all or nothing. One can’t reject one asset and not all the others. Assets are distributed according to the donor’s wishes as if the intended recipient had already passed away. I knew a 84 year-old woman who was receiving Medicade. She refused to inherit property from her brother in order to avoid the state taking the lion’s share. Contrary to cwthree, there are no inheritance taxes in the USA. Gift and estate taxes are paid by the donor, not the recipient. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [December 19, 2012, 5:19pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/4 "2012-12-19T17:19:49Z")
Since the central question seems to have been answered, here’s a tangential comment: If passing up on the gift or inheritance happens within certain time frames before or after a bankrupcty, it’s entirely possible that the courts will insist on using the money/assets to pay creditors. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [December 19, 2012, 5:48pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/5 "2012-12-19T17:48:59Z")
For federal tax purposes, you can disclaim a bequest so long as you are not coerced or induced to do so. See [Estate of Monroe v. IRS](https://bulk.resource.org/courts.gov/c/F3/124/124.F3d.699.95-60576.html), for example. ---
**Author:** ![AuntiePam](https://avatars.discourse-cdn.com/v4/letter/a/f19dbf/32.png) [@AuntiePam](https://boards.straightdope.com/u/AuntiePam)\ **Post date:** [December 19, 2012, 5:59pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/6 "2012-12-19T17:59:32Z")
> [@bizerta](#): > > Contrary to cwthree, there are no inheritance taxes in the USA. Gift and estate taxes are paid by the donor, not the recipient. But the recipients do pay some tax. I disclaimed my brother’s estate in favor of my kids, and they had to pay federal income tax on the cash they received. Brother’s house was also part of the estate and the kids shared the proceeds from the sale. I don’t know what the tax liability was on that money. ---
**Author:** ![Sateryn76](https://avatars.discourse-cdn.com/v4/letter/s/a88e4f/32.png) [@Sateryn76](https://boards.straightdope.com/u/Sateryn76)\ **Post date:** [December 19, 2012, 6:07pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/7 "2012-12-19T18:07:19Z")
> [@dracoi](#): > > Since the central question seems to have been answered, here’s a tangential comment: If passing up on the gift or inheritance happens within certain time frames before or after a bankrupcty, it’s entirely possible that the courts will insist on using the money/assets to pay creditors. Yes - it would be considered a fraudulent transfer, and would easily be avoided by the Trustee. There’s a two year lookback period under the US Code, but in Indiana, we have a statute that gives us a four year lookback period. IANAL, etc. ---
**Author:** ![muldoonthief](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/muldoonthief/32/3188_2.png) [@muldoonthief](https://boards.straightdope.com/u/muldoonthief)\ **Post date:** [December 19, 2012, 6:40pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/8 "2012-12-19T18:40:19Z")
> [@AuntiePam](#): > > But the recipients do pay some tax. I disclaimed my brother’s estate in favor of my kids, and they had to pay federal income tax on the cash they received. > > Brother’s house was also part of the estate and the kids shared the proceeds from the sale. I don’t know what the tax liability was on that money. According to the [IRS](http://www.irs.gov/publications/p17/ch12.html), inheritances are not taxable income: > [@](#): > > In most cases, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [December 19, 2012, 6:51pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/9 "2012-12-19T18:51:50Z")
Gifts of over $10,000 are taxable to the recipient. ---
**Author:** ![muldoonthief](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/muldoonthief/32/3188_2.png) [@muldoonthief](https://boards.straightdope.com/u/muldoonthief)\ **Post date:** [December 19, 2012, 7:05pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/10 "2012-12-19T19:05:34Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Gifts of over $10,000 are taxable to the recipient. No they’re not. Gifts to a single recipient above $13000/year are taxable to the _giver._ No tax burden is created on the recipient. [Cite.](http://fairmark.com/general-taxation/tax-rules-for-gifts/) ---
**Author:** ![AnkhAscendant](https://avatars.discourse-cdn.com/v4/letter/a/c2a13f/32.png) [@AnkhAscendant](https://boards.straightdope.com/u/AnkhAscendant)\ **Post date:** [December 19, 2012, 7:05pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/11 "2012-12-19T19:05:57Z")
According to [about.com](http://about.com), there are 7 states that collect inheritance taxes, 18 that get estate taxes, and two do both. It also says there is a federal inheritance tax that really only comes into play after [$5 millionish](http://wills.about.com/od/understandingestatetaxes/a/whatisestatetax.htm). So I’m guessing you don’t claim the inheritance on your income tax return, which is why the IRS site is quoted with the above, but you still pay it independently. Have a [state tax comparison chart](http://wills.about.com/od/stateestatetaxes/a/state-tax-chart.htm). It makes Alaska look appealing… ---
**Author:** ![muldoonthief](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/muldoonthief/32/3188_2.png) [@muldoonthief](https://boards.straightdope.com/u/muldoonthief)\ **Post date:** [December 19, 2012, 7:10pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/12 "2012-12-19T19:10:11Z")
> [@AnkhAscendant](#): > > According to [about.com](http://about.com), there are 7 states that collect inheritance taxes, 18 that get estate taxes, and two do both. It also says there is a federal inheritance tax that really only comes into play after [$5 millionish](http://wills.about.com/od/understandingestatetaxes/a/whatisestatetax.htm). So I’m guessing you don’t claim the inheritance on your income tax return, which is why the IRS site is quoted with the above, but you still pay it independently. > > Have a [state tax comparison chart](http://wills.about.com/od/stateestatetaxes/a/state-tax-chart.htm). It makes Alaska look appealing… But even that is the federal ESTATE tax. It’s paid _by the estate_ before transferring the assets to the recipient. It’s all part of the work the executor does to pay off debts, dispose of property, etc. etc. before closing the estate. The recipient doesn’t have to do anything, federal tax wise - he/she just gets money from the estate, that taxes have already been paid on. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [December 19, 2012, 7:16pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/13 "2012-12-19T19:16:05Z")
> [@muldoonthief](#): > > No they’re not. Gifts to a single recipient above $13000/year are taxable to the _giver._ No tax burden is created on the recipient. [Cite.](http://fairmark.com/general-taxation/tax-rules-for-gifts/) You’re quite right. I was thinking of the exemption being per donee rather than the tax. ---
**Author:** ![Aspidistra](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aspidistra/32/3894_2.png) [@Aspidistra](https://boards.straightdope.com/u/Aspidistra)\ **Post date:** [December 19, 2012, 7:19pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/14 "2012-12-19T19:19:27Z")
What if the child encourages the grandchildren to contest the will, and doesn’t oppose it in court? ---
**Author:** ![Strain\_of\_Thought](https://avatars.discourse-cdn.com/v4/letter/s/3be4f8/32.png) [@Strain\_of\_Thought](https://boards.straightdope.com/u/Strain_of_Thought)\ **Post date:** [December 19, 2012, 7:29pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/15 "2012-12-19T19:29:09Z")
The OP reminded me of the scenario of incompetent police bureaucracy depicted starting in this Leftover Soup comic: [http://leftoversoup.com/archive.php?num=260](http://leftoversoup.com/archive.php?num=260) …and culminating a few pages later here: [http://leftoversoup.com/archive.php?num=263](http://leftoversoup.com/archive.php?num=263) Synopsis: Police Department insists wrongfully arrested character released from jail immediately claim the gun wielded by his mugger, as botched records show it to be his gun. Character has no holster on his person or concealed carry permit, and is pretty sure walking out of the building with the gun in his hand will give the police an excuse to re-arrest him. His solution: declare the gun to be a personal gift to the officer trying to make him accept it. While I certainly expect this level of disinterested malice from police officers in real life, I’m really curious as to whether what’s being pulled could be made to legally stick, in either direction. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [December 19, 2012, 8:02pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/16 "2012-12-19T20:02:27Z")
You can’t gift something unless you own it - so you cannot regift “your” firearm. However, the police cannot force you to accept an item. (It would make an interesting scene if it got to court. “I refused to accept it so the policeman picked up the gun and jammed it into my pocket”). Courts are not stupid and do not (usually) rely on a blinders-on single-minded literal reading of the law when it obviously is being misapplied. IIRC, in the USA there is capital gains payable on the increased value between what the house (or other asset) was bought for, and what it sold for, minus improvements. It is payable by the estate. If grandson Joe wants to keep the family house, and the estate does not allow for paying the tax (“Joe gets house, Sally gets the cash in the bank account”) then Joe can either allow the executor to sell the house and take the net proceeds after taxes, or take the house, and pay the capital gains based on a fair appraisal of market value out of his pocket. Maybe this i what you are thinking of. It’s not just fraudulent transfer. The law also allows “transactions in anticipation of bankruptcy” to be reversed by the judge. If Joe’s Carpets looks like he’s going bankrupt, and Sam’s carpet wholesaler says “OK, pay me now for all the carpet I’ve fronted you or else I’ll send a truck to take away the half of your stock I gave you on credit” then the other creditors in bankruptcy a few months later can go after Sam to have that transaction reversed, the money goes back into the pot to be split fairly. In Canada IIRC the rule is about transactions up to 6 months before filing? So you can’t sell your house or car to your kid for $1 so that the creditors can’t chase take them. You can’t contest a will without valid grounds, and “the person who gets it doesn’t want it” is not grounds to overturn a valid freely made will. ---
**Author:** ![Simple\_Linctus](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Simple\_Linctus](https://boards.straightdope.com/u/Simple_Linctus)\ **Post date:** [December 19, 2012, 8:15pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/17 "2012-12-19T20:15:42Z")
In the UK I believe you can. I don’t know the exact procedure but from personal (well, family) experience you can do something called filing a deed of variation and make it so it was gifted to someone else. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [December 19, 2012, 9:29pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/18 "2012-12-19T21:29:15Z")
> [@AuntiePam](#): > > But the recipients do pay some tax. I disclaimed my brother’s estate in favor of my kids, and they had to pay federal income tax on the cash they received. > > Brother’s house was also part of the estate and the kids shared the proceeds from the sale. I don’t know what the tax liability was on that money. I can assure you that the kids didn’t pay any tax on the cash. However, estates are complicated things. There are taxes paid all over the place. You might be thinking of taxes that the kids paid on earnings (such as interest) while the cash was in the trust. It’s perhaps splitting hairs, but there is a distinction between paying tax on the _inheritance_, and paying tax on the \*earnings \*from the inheritance. ---
**Author:** ![Sateryn76](https://avatars.discourse-cdn.com/v4/letter/s/a88e4f/32.png) [@Sateryn76](https://boards.straightdope.com/u/Sateryn76)\ **Post date:** [December 19, 2012, 9:49pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/19 "2012-12-19T21:49:04Z")
> [@dracoi](#): > > I can assure you that the kids didn’t pay any tax on the cash. > > However, estates are complicated things. There are taxes paid all over the place. You might be thinking of taxes that the kids paid on earnings (such as interest) while the cash was in the trust. It’s perhaps splitting hairs, but there is a distinction between paying tax on the _inheritance_, and paying tax on the \*earnings \*from the inheritance. I’m running my dad’s estate, and I can say that in Indiana, if you inherit above $250,000.00, you will be hit with a tax on those amounts above that number. A tax paid by the heir. I don’t remember what the rate is, since I’m won’t be getting that much. And, certain things are exempt, like life insurance (which runs outside the Estate) and certain types of retirement accounts (like an inherited IRA). ---
**Author:** ![AuntiePam](https://avatars.discourse-cdn.com/v4/letter/a/f19dbf/32.png) [@AuntiePam](https://boards.straightdope.com/u/AuntiePam)\ **Post date:** [December 19, 2012, 9:57pm UTC](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540/20 "2012-12-19T21:57:02Z")
> [@dracoi](#): > > I can assure you that the kids didn’t pay any tax on the cash. > > However, estates are complicated things. There are taxes paid all over the place. You might be thinking of taxes that the kids paid on earnings (such as interest) while the cash was in the trust. It’s perhaps splitting hairs, but there is a distinction between paying tax on the _inheritance_, and paying tax on the \*earnings \*from the inheritance. They did indeed pay federal income tax on it, but now that I think about it (memory returns), the cash came from my brother’s 401-k, from his job. He hadn’t started collecting yet – the money was his retirement fund. That type of money might be treated differently than money from a bank account or life insurance. [Next page](https://boards.straightdope.com/t/are-you-legally-required-to-accept-an-inheritance-how-about-a-gift/644540.md?page=2)