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The kids are gone, time for a new financial plan<\/p>\n
Once you become an empty nester, you’ll want to reevaluate your money.<\/p>\n
USA TODAY<\/p>\n
An inheritance often is seen as a financial windfall, but there are times when people may want to consider saying thanks, but no thanks.<\/p>\n
Receiving a sizable gift, if not structured properly, can have unintended consequences that may upend your financial situation or cause friction between family members. If either of those is the case, consider refusing it, experts said. It may not be worth your time, money or emotions.<\/p>\n
\u201cIt\u2019s very important what type of asset you\u2019re inheriting — what it can do for you and if it fits into your universe, and are you the best custodial of those assets,\u201d said Miklos Ringbauer, certified public accountant in Southern California.<\/p>\n
Why should people think about inheritance now?<\/p>\n
The so-called great wealth transfer has begun. Nearly $124 trillion in assets will change hands through 2048, according to estimates by the consulting firm Cerulli Associates. Recipients<\/a> are expected to inherit<\/a> some $106 trillion of that amount, mainly from baby boomers, with the rest going to charity.<\/p>\n Assets passed down will include cash and other liquid assets, stocks and bonds, real estate, business interests, retirement accounts, other investments, and personal property.<\/p>\n When might you want to say no?<\/p>\n Saying no to an inheritance isn\u2019t typical, and experts suggest you consult with a financial planner and an accountant to help you determine if it’s right for you.<\/p>\n However, some instances in which you might want to consider refusing an inheritance include if:<\/p>\n Beware, tricky government benefits<\/p>\n Claiming an inheritance can push you above income and asset limits to qualify for government programs<\/a> like Medicaid or Supplemental Security Income (SSI). However, it isn\u2019t as simple as disclaiming an inheritance to stay within the limits because refusing an inheritance is seen as gifting, which also isn\u2019t allowed.<\/p>\n Because disclaiming an inheritance can still hurt you, some experts suggest you take the inheritance and spend it down immediately to requalify for benefits.<\/p>\n Medicaid recipients can use their inheritance to pay off debt, pay for long-term care, make home modifications for safety and accessibility, prepay funeral and burial expenses via an\u00a0Irrevocable Funeral Trust<\/a>, or buy assets that are exempt from Medicaid\u2019s asset limit such as furniture and appliances for one\u2019s home, clothing, or upgrading a vehicle, according to the American Council on Aging<\/a>.<\/p>\n The best way to avoid this is to ensure the \u201cparent doesn\u2019t leave the person money,\u201d Simasko said. \u201cUse a special trust instead and the person can draw from it.\u201d<\/p>\n For example, assets to a beneficiary of an irrevocable trust<\/a> don\u2019t affect the beneficiary\u2019s assets and wouldn\u2019t count against their qualification for government benefits, Ringbauer said. Yet, the beneficiary would be able to tap those assets.<\/p>\n How to decline an inheritance<\/p>\n The legal process is \u201cdisclaiming\u201d an inheritance, which means you\u2019re refusing to accept the rights to the assets you were supposed to inherit. Here\u2019s generally how it would work:<\/p>\n What happens to the disclaimed inheritance?<\/p>\n Disclaimed inheritances will go to the next person, or beneficiary, in line. You can\u2019t choose the person to receive the asset.<\/p>\n If there isn\u2019t another person named as a next beneficiary, the asset would go through the probate process<\/a> to be left to someone related to the deceased.<\/p>\n\n
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