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Why would you disclaim a bequest?


Life-saving Scenarios
By disclaiming a bequest, you can save your family from some serious tax woes.
By disclaiming a bequest, you can save your family from some serious tax woes.
Pixland/Thinkstock

Of course, the scenarios on the previous page are all examples of high-powered financial moves a family can make to ensure that as much money as possible passes from generation to generation without being taxed. But what about the rest of us? Are disclaimers really relevant to those of us who are just trying to get by?

Well, yes. If you have bad credit issues, your inheritance could vanish without a trace the second you receive it. This is sticky in any family situation, especially a dramatic one involving the death of a loved one. It could end up costing you a lot more than your windfall. In fact, this is why disclaimers were invented in the first place. By disclaiming the benefit, your tax woes don't touch the estate at all.

Even if you don't have problems like debt, filing a qualified disclaimer can help get around mistakes in a will that might otherwise tie up those benefits forever. For example, a man's second wife might disclaim her spousal inheritance to make sure his children from a previous marriage are covered equitably, even though this wasn't specified in the will. Or she might do it to ensure that her estate, when her time comes, doesn't run into its own problems.