Mr. and Mrs. Jefferson had seven adult children and a clan of grandchildren when they passed away. Their trust stated that their house was to be sold and that all the proceeds, plus all of their other assets, be divided amongst their seven children, the oldest of whom were twins, Keith and Kevin.
Keith, like Kevin, was 62 years old. He had been very successful in his career and most of his investments were very profitable. Life had treated Keith well - his children were independent and he and his wife had a net worth of over $2.5 million. He also had a pension and social security to look forward to. As he began to think about his portion of the inheritance from his parents, he realized that it would not make a marginal difference in his life; he would probably just spend it on some high-end luxury item like a fancy sports car.
As he thought about it more and more, Keith came to terms with the fact that his siblings could use his portion much more than he could. None of his siblings were doing as financially well as he was. In fact, most of the other six siblings seemed to always be struggling, barely able to save or invest. So, after talking it over with his wife, Keith decided that he would sign the disclaimer affidavit, disclaiming his portion of the inheritance. In doing so, his portion would default to his siblings and be equally divided amongst them.
Kevin, the other twin, had travelled a much different, much bumpier road. He had changed careers several times, gotten divorced twice, and fallen into serious financial issues. Some of those issues, like unpaid alimony and IRS debts, had even become legal judgments. Kevin could really use his portion of the inheritance; however he was concerned that once it was put in an account under his name, the funds would be garnished or confiscated to satisfy one of the judgments against him. As he pondered the possibilities and slim likelihood of ever actually seeing his inheritance money, he figured he would rather see his siblings get the money than take a chance on the IRS (or his ex-wife) getting the money. So Kevin, like Keith, also signed a disclaimer form, allowing his siblings (except Keith) to equally share his portion of the inheritance.
Keith and Kevin provide two common examples of why heirs choose to disclaim their inheritance, but there are a few other cases in which I've seen this done: when an heir strongly dislikes the person the inheritance is coming from and when an heir wants nothing to do with the other family members involved in the settlement process. In all of these cases, one heir signing a disclaimer means that there is more for the other heirs to share. If, however, an heir cannot be contacted or simply refuses to sign a disclaimer form, the inheritance is legally still theirs and, in most cases, that money will be held for a period of time and, if still unclaimed, will eventually go to the State of California as unclaimed property!
The moral of the story here is if you don't want your inheritance, sign the disclaimer, unless of course you would rather the State of California eventually add it to her coffers!
© 2014 by Marlene S. Cooper. All rights reserved.