Refuse An IRA Inheritance? Not As Foolish As It Sounds

When you've inherited an IRA, there are four options you can take.

1. Transfer the funds to your existing account (spouses only).
2. Transfer the funds to an Inherited IRA.
3. Take a lump sum of the funds now.
4. Choose not to take the funds.

There's always the option of not taking the money, thereby refusing the inheritance. While this may sound foolish at first, you might consider this option for any one of the following four reasons:

1. If accepting the inheritance would push the value of your own estate over a new threshold for higher federal and estate taxes
2. If accepting the inheritance would push you over a set financial limit, making you ineligible to receive other types of financial aid or government assistance (such as student loans or Medicaid, respectively)
3. If you'd rather see the inheritance fall to the next heir in line in the will (such as your child or grandchild)
4. If you'd rather not accept an inheritance that's more trouble than good to you (such as a run-down house in a bad neighborhood you'd have to fix up and sell)

While laws for this vary by state, both spousal and non-spousal beneficiaries have the option of disclaiming or renouncing an inheritance as long as the correct procedures are followed.

If you fall into this or any other of these categories, let's schedule a time to talk.