refusing a bequest

Your favorite aunt has decided to leave her vacation condo to you in her will. While you are saddened by the thought of someday losing her, daydreams of winter in the sun seem appealing. But have you considered all of the maintenance costs, HOA fees, property taxes and other expenses that can add up to many thousands of dollars every year. What if a loved one’s gift made in their will comes with hidden expenses or tax burdens that are simply too much for you to take on? In such a situation, the law does allow for a beneficiary to disclaim or renounce the gift.

To properly renounce a disposition, the law requires you do so in writing. The renunciation must be filed with the court of proper jurisdiction and be accompanied by an affidavit stating that you have not received any compensation from the party that would benefit from your renunciation. Finally, the filing must be made within nine months (in NY) of the effective date of the disposition.
Generally speaking, the rule in New York is that any dispositions of property can be renounced. That means gifts of cash, real property, jewelry, etc. can be renounced if done so properly. The law also permits a beneficiary to partially renounce their disposition.

When done properly, a renunciation has the same effect as if the renouncing person had predeceased the decedent. It is important to note, that as the renouncing beneficiary, you don’t have any say over who the property ultimately ends up with. That will be controlled by the will if it names alternative heirs or by the rules of intestate succession. That means the renouncing party essentially stands aside and lets the disposition flow down to the next beneficiary whether that be by operation of the will or through intestate succession. Additionally, the decision to renounce is, with very minor exceptions, irrevocable. You don’t get a redo if you later decide you did in fact want that condo!

In addition to being a way to avoid unwanted costs or stress, a renunciation of a gift can also be a strategy to avoid creditors. With some exceptions, including federal tax liens, creditors of a beneficiary that renounces their disposition cannot reach the renounced property. However, it has been held that renounced property can be considered as an available resource for determining Medicaid eligibility.

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