Oct 27, 2010
Dear Liza: I wrote you earlier this week about my sister, who died without a will. What do I do if I don't want 1/2 of my sister's estate, but want it to go to her nephew? If your sister died without a will, and had no spouse, children, or living parents, her estate would be split between her surviving siblings, at least in my state (You have to check your state's rules on intestate succession to be sure). If you DON'T want her assets, you can disclaim them. This is a legal way of saying "no thank-you." If done in writing, no later than nine months after your sister's death, and if you have not used any of the property for your own benefit, and if you don't specificy where it is to go next, the property will pass as if you had died before your sister. If you have children, the property would go to them. If the nephew is not your child, you'd have to get your brother to disclaim the property because you are not allowed to specificy where the property goes next. Or, you could accept the property, then make a gift to the nephew. But this would be considered a gift from you to him, and because it is a gift of more than $13,000, you would need to file a gift tax return by April 15 of the following year. You won't owe any gift tax on this gift, but it does use up some of your lifetime credit against the gift tax. Each of us can give away up to $1 million during our lifetime without having to pay gift tax. Disclaiming would be better, if it fits what you are trying to do, because it's considered a direct inheritance from your sister to your nephew, and doesn't diminish your ability to transfer your own property during your life.