Can a Spouse Disclaim Inherited Property Interest?

Question from miyo, Can a Spouse Disclaim Inherited Property Interest?

Answer from AI:

When a spouse passes away and the couple owns property together as tenants by the entirety, the surviving spouse typically inherits the deceased spouse’s interest in the property automatically. This is due to the right of survivorship, which is a characteristic of the tenancy by the entirety and joint tenancy forms of property ownership. However, there are circumstances where the surviving spouse may not wish to inherit the property and instead wants to disclaim, or legally refuse, the inheritance.

Understanding Qualified Disclaimers

A disclaimer is a refusal to accept an inheritance or gift. Under certain conditions, a disclaimer can be considered “qualified,” which means it meets the requirements set forth by the Internal Revenue Code (IRC) in section 2518(b). A qualified disclaimer, if properly executed, allows the disclaimed interest to pass as though the disclaimant had predeceased the decedent, without any gift or estate tax consequences to the disclaimant.

To be a qualified disclaimer under section 2518(b), the following conditions must be met:

1. The disclaimer must be in writing.
2. It must be made within nine months of the date of death or the date the disclaimant turns 21.
3. The disclaimant must not have accepted the property or any of its benefits.
4. The disclaimant must not direct where the property will go; instead, it must pass without any direction from the disclaimant, typically under the terms of the will or by intestacy.

Scenario: Disclaiming a Survivorship Interest

In the scenario you described, the surviving spouse wishes to disclaim the one-half undivided interest in the residence that she would inherit by right of survivorship. If she wants to make a qualified disclaimer, she must ensure that she has not accepted any benefits from the property and that she delivers the written disclaimer to the personal representative of the deceased spouse’s estate within the required time frame.

If the surviving spouse successfully disclaims the interest within nine months of the deceased spouse’s death (by April 10, 1999, in this case), and assuming all other requirements of section 2518(b) are met, the property interest would pass under the deceased spouse’s will to their adult child.

Ownership and Selling the Residence

If the surviving spouse makes a qualified disclaimer, she would not own the one-half undivided interest in the property that she disclaimed. The interest would pass directly to the adult child, assuming that is what the deceased spouse’s will dictates. As a result, the surviving spouse would not have the authority to sell the residence on her own, as she would no longer have complete ownership of the property.

Consulting a Legal Professional

It is important for individuals in such situations to consult with a legal professional, such as an estate planning attorney or a tax advisor, to ensure that the disclaimer is properly executed and to understand the legal and tax implications of disclaiming property. A qualified professional can provide personalized advice and ensure that all actions taken comply with the relevant laws and regulations.

For more information on qualified disclaimers, you can refer to the Internal Revenue Code section 2518.

Remember, this information is general in nature and should not be construed as legal advice. Legal situations can be complex and fact-specific, and it is always recommended to seek personalized legal counsel for your particular circumstances.