Can I Refuse an Inheritance in Washington?

Not everyone who is left something wants it. You may be comfortable financially and prefer that your mother's gift go straight to your children. You may have been left a share of a cabin you have no interest in co-owning with your cousins.

Washington law lets you say no. Under RCW 11.86.021, a beneficiary may disclaim an interest in whole or in part. A disclaimer is a signed writing that refuses the property, and when it is done correctly the law treats you as if you had died before the person who left it to you. The catches are that there is a firm nine-month deadline, you cannot have already accepted the property or any benefit from it, and you do not get to pick who receives it in your place.

What Can Be Disclaimed?

Almost any kind of inheritance. The list in RCW 11.86.011 includes property passing under a will or by intestate succession, interests in a trust, life insurance and annuity proceeds, the survivor's share of a joint tenancy, retirement accounts and employee benefit plans, property passing under a community property agreement, and real estate passing under a transfer on death deed.

RCW 11.86.021 allows a disclaimer of the whole interest, a part of it, or specific shares or assets. A person left a house and a brokerage account could keep one and disclaim the other.

What Does a Valid Disclaimer Require?

Under RCW 11.86.031, the document must be in writing, be signed by the person disclaiming, identify the interest being disclaimed, and state the disclaimer and its extent.

The statute then requires delivery. The disclaimer must be mailed by first-class mail or otherwise delivered to the creator of the interest, the creator's legal representative, or the holder of legal title to the property. When someone has died and a probate is open, that usually means the personal representative.

Two optional steps follow. A copy may be filed with the clerk of the court where the estate is being administered, and a disclaimer of real property may be recorded with the auditor of the county where the property sits. RCW 11.86.031 says a disclaimer of real property gives notice to all persons only from the date it is recorded.

The Nine-Month Deadline

Under RCW 11.86.031, the disclaimer must be delivered or mailed no later than nine months after the latest of these dates: the date the beneficiary turns 21, the date of the transfer, or the date the beneficiary is finally ascertained and the interest is indefeasibly vested.

For an ordinary inheritance, the "date of the transfer" is the date of death. RCW 11.86.011 defines it that way, and treats a deceased joint tenant's interest as transferred at death, not when the joint tenancy was created. So for an adult named outright in a will, the safe assumption is that the clock runs nine months from the death, not from the date the will is admitted to probate or the date you learn of the gift.

A disclaimer also cannot come too early. In In re Estate of Baird, 131 Wn.2d 514, 933 P.2d 1031 (1997), a son signed a disclaimer of his share of his mother's estate several months before she died. The Washington Supreme Court held that chapter 11.86 RCW does not authorize a disclaimer of a mere expectancy.

What Can Block a Disclaimer?

RCW 11.86.051 lists the things that take the option away. You may not disclaim an interest if you have accepted the interest or a benefit under it, if you have assigned, conveyed, encumbered, pledged, or otherwise transferred it or contracted to do so, if it has been sold or disposed of through judicial process, or if you waived the right to disclaim in writing.

Acceptance is the common trap. Moving into the house, depositing the check, or collecting rent from inherited property can all look like accepting a benefit.

There is one exception. If you already owned an interest in the same property before the transfer, as a joint tenant or as community property for example, your continued use of the property is presumed to be use of the share you already owned.

Where Does the Property Go?

You do not get to redirect it. Under RCW 11.86.041, unless the will or other document says otherwise, the disclaimed interest passes as if you had died immediately before the date of the transfer, and the disclaimer relates back to that date for all purposes. It is binding on you and on anyone claiming through you.

For a gift under a will, RCW 11.86.041 adds that the person disclaiming is treated as having died for purposes of RCW 11.12.110, Washington's antilapse statute. When the person disclaiming is a relative covered by that statute and has descendants, the gift passes to those descendants unless the will provides otherwise. That statute is explained in what happens if someone in my will dies before I do. For property passing without a will, the order of heirs in what happens if you die without a will in Washington is applied as though you were not there.

The Federal Tax Rule

Under 26 U.S.C. 2518, if a person makes a "qualified disclaimer," federal gift and estate tax law treats the property as if it had never been transferred to that person. Without that rule, turning down an inheritance so it passes to your children could be treated as a gift from you to them.

The federal requirements resemble Washington's but are not identical. The refusal must be written. It must be received by the transferor's legal representative or the holder of legal title no later than nine months after the later of the transfer or the day the person turns 21. The person must not have accepted the interest or any of its benefits. And the property must pass, without any direction from the person disclaiming, to the spouse of the person who died or to someone other than the person disclaiming.

The federal test asks when the disclaimer was received, while Washington's asks when it was delivered or mailed, and Washington's deadline has a third possible starting date the federal statute does not list. A disclaimer can satisfy Washington law and still fail the federal test.

Can a Disclaimer Keep an Inheritance From Creditors?

Do not count on it. In Baird, the son signed his early disclaimer several months before a large judgment was entered against him and he filed for bankruptcy. Because the disclaimer was not valid, his share of his mother's estate was still his when she died. In Drye v. United States, 528 U.S. 49 (1999), the United States Supreme Court held that a disclaimer valid under state law did not defeat federal tax liens against the person who disclaimed.

Spouses sometimes ask about disclaiming because a divorce is on the horizon. RCW 26.16.010 already treats property a spouse acquires by inheritance as that spouse's separate property, a subject covered in gifts and inheritance as separate property in Washington.

Decide Before You Touch Anything

A disclaimer is binding, the deadline is short, and one deposit can take the option off the table. If you are thinking about refusing an inheritance, or want to build that flexibility into your own estate plan, the Law Office of Chad Foster can help you weigh it. Call 425.785.8679 to talk with a Snohomish County estate planning attorney.