Inheriting property can sometimes be more trouble than it’s worth. Aside from pushing you into a higher tax bracket, some properties can come with significant maintenance and upkeep costs, or existing debts like mortgages or liens.
The Maryland Uniform Disclaimer of Property Interests Act is a law that lets people refuse – “disclaim” – any interest in or control over inherited property. This allows for great flexibility in managing estates, enabling beneficiaries to make decisions that fit their personal and financial goals. Specifically, it can help you:
Reduce taxes
By refusing certain assets, beneficiaries can lower the estate’s total value, resulting in lower estate taxes. Refusing income-generating assets like rental properties or dividend-paying stocks can also help beneficiaries manage their income taxes better.
Keep government benefits
Inheriting properties might disqualify some beneficiaries from government benefits like Medicaid or Supplemental Security Income (SSI), which have strict asset limits. By disclaiming some of these assets, you can keep your benefits while still respecting your loved one’s wishes.
Plan for future generations
Disclaiming interest in property can be helpful for multi-generational estate planning. This is especially useful if the main beneficiary is already financially secure and wants to support their children or grandchildren. Depending on the provisions outlined in the trust, refusing property can let these assets go directly to the next beneficiary, which is often the primary beneficiary’s heir. However, make sure to consult with an estate planning attorney to avoid any complications with Maryland’s intestacy laws.
Some assets can come with liabilities
Refusing an inheritance can be a strategic choice for several reasons, like managing taxes, keeping eligibility for government benefits or avoiding unwanted responsibilities tied to certain assets. But before deciding, it’s important to understand all the implications. Make sure to do your due diligence and consult with the right legal resources.
