Why Not Take the Money?

Hulk Hogan’s estate has been in the news with headlines that his estranged daughter, Brooke, is refusing to take her inheritance. Now, it turns out that Brooke was not included in her father’s estate plan after all. Apparently, she had requested to be left out and that’s what happened.

But the question remains: Why would Brooke turn down an inheritance? Was it intended as the final snub of an estranged daughter? The initial reports were that she expected there would be fights over her father’s estate and she didn’t want to be involved. There were pending legal disputes with an ex-wife and expected claims on his estate by his current wife. They married a few years before Hulk Hogan’s death. Legal battles can go on for years, they can be costly, and it was reported Brooke did not want to become embroiled.

There can be other reasons for declining an inheritance. If a beneficiary has legal or creditor issues, the beneficiary may not be able to keep the inherited money if it has to be used to satisfy debts or legal claims. If the beneficiary declined the inheritance and if the money would pass to the beneficiary’s children instead, it could be a good decision for the beneficiary to decline.

Sometimes a beneficiary already has significant wealth of their own and the inheritance would be more of a tax burden than a benefit. Again, depending on how the inheritance would be distributed if the beneficiary declined, it could be a great way to transfer wealth to the next generation with less tax.

There is a legal term for declining to take an inheritance. It is called a “disclaimer” and there are technical requirements that must be met to make a proper disclaimer. If an inheritance is “disclaimed,” it is treated as if the disclaiming beneficiary was predeceased. Then, you have to look at the Will or Trust to see who would receive the inheritance if the intended beneficiary is not living.

Often, it is the beneficiary’s descendants, but not always. If the beneficiary disclaims, they cannot control who gets the inheritance. The Will or Trust determines it. And, to avoid tax issues, the disclaimer must be made within nine months from the date of death.

There are many good reasons for disclaiming an inheritance. When considering a disclaimer, it is important to understand the consequences and seek good legal advice to comply with all the legal requirements.

By Lisa Alexander, Esq.

JAKLE, ALEXANDER & PATTON, LLP

Main Line: 310-395-6555