Episode 101
Host: Jill Mastroianni
Why You Can’t Just Refuse an Inheritance
What happens when someone leaves you an inheritance you don't want? Can you simply refuse it? And if you do, who gets the money instead?
In this episode of The Death Readiness Podcast, estate planning attorney Jill Mastroianni takes a closer look at a surprising estate planning problem inspired by And Just Like That, the sequel to Sex and the City. When Mr. Big leaves his ex-wife Natasha a million dollars, she tells Carrie Bradshaw she doesn't want the money and asks her to give it to charity.
But refusing an inheritance isn't that simple. Jill explains how qualified disclaimers work, why beneficiaries cannot decide where disclaimed property goes, and how estate planning laws in different states can produce dramatically different outcomes. She also shares a real-life estate administration story about a beneficiary who wanted nothing to do with his inheritance.
What You’ll Learn in This Episode
What You'll Learn About Estate Planning and Refusing an Inheritance
Why you can't simply refuse an inheritance. Saying “no, thanks” to an inheritance is not the same as legally disclaiming it. There are formal requirements and deadlines that must be followed.
What a qualified disclaimer is and how it works. A disclaimer allows a beneficiary to legally refuse an inheritance, but federal tax law and applicable state law impose specific requirements. For federal tax purposes, a qualified disclaimer must be completed within nine months.
Why you can't choose who receives a disclaimed inheritance. If you refuse an inheritance through a qualified disclaimer, you cannot direct the money to a particular person or charity. Instead, the property passes according to the estate planning documents and applicable state law.
How estate planning laws differ between states. New York and Tennessee have different anti-lapse statutes, which affect who inherits property when a beneficiary dies before the person making the Will or is treated as having died first after disclaiming an inheritance.
What happens when a beneficiary dies before receiving an inheritance. Anti-lapse statutes can preserve gifts for a beneficiary’s descendants, sometimes producing results the person who created the Will never anticipated.
Why the residuary clause in your Will matters. The residuary estate receives property that isn't otherwise effectively distributed, including gifts that are disclaimed.
Why an ex-spouse might receive an inheritance. Estate planning after divorce sometimes involves financial obligations that survive the marriage, including obligations established in a marital dissolution agreement.
The difference between probate and non-probate assets. Your Will doesn't necessarily control everything you own. Assets with beneficiary designations or survivorship arrangements pass outside probate.
What to do before refusing an inheritance. Accepting money or exercising control over inherited property prevent a later qualified disclaimer. Understanding your options before taking action is essential.
How to avoid unintended consequences in your own estate plan. Thoughtful estate planning addresses not only who should inherit your property, but also what should happen if that person dies before you or chooses not to accept the inheritance.
Resources and Links
Related Episodes of The Death Readiness Podcast
Episode 91 – What really happens to a Will after someone dies, and why the dramatic Hollywood-style reading of the Will isn't how probate actually works. https://www.deathreadiness.com/podcast/91
Episode 95 – Estate planning for divorced parents, including life insurance obligations intended to protect minor children. https://www.deathreadiness.com/podcast/95
Estate Planning Resources
Will vs. Non-Probate Assets Infographic – A visual guide to understanding which assets are controlled by your Will and which pass outside probate. https://www.deathreadiness.com/probate-infographic
The Death Readiness Playbook – A practical resource for organizing important information, documenting decisions, and helping your loved ones understand your wishes. https://www.deathreadiness.com/playbook
The Death Readiness Dispatch – Get practical estate planning information, helpful resources, behind-the-scenes stories, and more delivered to your inbox every Wednesday morning. https://www.deathreadiness.com/subscribe
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
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Subscribe to the Death Readiness Dispatch!
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What happens when someone leaves you an inheritance you don't want? Can you simply refuse it? And if you do, who gets it instead? Today, we're talking about why turning down an inheritance isn't necessarily as simple as saying no, why you can't direct where it goes instead, and how the same Will can produce very different results depending on which state you live in.
Welcome to The Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni — estate planning attorney, death readiness guide, and your translator for wills, trusts, probate, and the conversations most families avoid. If you’ve been wondering things like, ‘Can a trust protect what I leave to my children?’ ‘What happens if I give someone power of attorney over me?’ and ‘How can I help my parents while respecting their independence?’ You’re in the right place.
I was out walking all four of our dogs the other day, wearing a heavily weighted vest and listening to Noah Wyle on the Good Hang podcast. So, lots of moving parts. I was paying attention to the dogs, making sure nobody was getting tangled up in a leash or wandering into traffic. And I was listening to Noah Wyle talk about a dangerous encounter with an emu. Emus have always terrified me.
What I wasn't paying attention to was a man painting the crosswalk parallel to me and who had just painted the one in front of me. There were cones blocking traffic, but nothing blocking pedestrians. And I was about to walk straight across his freshly painted crosswalk. Four dogs and I, that’s 18 feet altogether.
And then, through my earbuds, I heard a voice that immediately transported me back to my days in New York City. "HEY! WET PAINT!" I looked up, realized what I was about to do, and gave him one of those little waves that means, "Thank you, I'm sorry, I’m embarrassed."
And all 18 of our feet walked around. Can you imagine? I was about to send all those little paw prints across his pristine white paint. To him, the problem was obvious. He was standing there watching us about to walk straight across his work. To me, there wasn't a problem at all. I didn't even realize there was something I needed to be paying attention to.
And I think that's a pretty good illustration of what happens in estate planning. Sometimes people make decisions that seem perfectly reasonable because they can’t see the next legal issue lurking just ahead.
Take refusing an inheritance, for example. If someone leaves you money or property and you don't want it, you should be able to just say, "No, thanks," and move on with your life? Right?
Well, as it turns out, it's not quite that simple.
Which brings me to an HBO Max show I've been watching lately, And Just Like That, the sequel to Sex and the City.
When I watched the original Sex and the City years ago, I was interested in Carrie's friendships, romantic entanglements, and adventures navigating life in New York City. But now, instead of just wondering what's going to happen with Carrie's love life, I'm thinking about probate, estate taxes, and anti-lapse statutes.
I'm about to give away a major plot point from the very first episode of And Just Like That, so if you haven't seen it and plan to watch, consider this your spoiler warning.
There was one particular storyline that caught my attention. Carrie’s husband Big dies, and leaves his ex-wife Natasha a million dollars. But then Natasha announces that she doesn't want the money and tells Carrie to give it to charity. That's what we're talking about today.
Carrie Bradshaw, played by Sarah Jessica Parker, is married to John Preston, whom everyone calls Big. And Big dies. Now, Big is a very wealthy man. If you watched the original Sex and the City, you probably remember that he was some sort of high-flying finance guy who could afford extraordinarily expensive Manhattan apartments.
So, naturally, when he dies, and me being me, I start wondering what kind of estate plan did he have. And I have lots of questions. But Hollywood doesn’t answer them for me.
First, we're led to believe that Big's Will controls the distribution of his entire estate.
But a Will doesn't necessarily control everything someone owns when they die.
It controls probate assets only. Probate assets are those assets that don't pass automatically to someone else through a beneficiary designation, joint ownership with survivorship rights, or another arrangement that operates outside of probate.
For example, if Big owned a retirement account and named Carrie as beneficiary, that account would pass directly to Carrie. It wouldn’t matter what Big’s Will said because a retirement account with a named individual beneficiary is not a probate asset.
In fact, given Big's wealth and his interest in privacy, I was surprised that he hadn't done some planning with trusts.
I’m going to link in the show notes to a really great infographic that shows the difference between property that is controlled by your Will and property that isn’t.
Let’s move on to the next thing Hollywood gets wrong. The reading of the Will, which generally makes for good television. There they are, gathered in a fancy Manhattan attorney’s conference room: Carrie, Big’s widow; Miranda, Carrie’s friend and a corporate attorney; and Big’s former assistant. And they’re literally sitting there, reading Big’s Will page by page, waiting for the next big revelation.
It’s wonderfully dramatic. It’s also not how estate administration actually works. If you’re curious about what really happens to a Will after someone dies, I covered that in Episode 91 and I’ll link to it in the show notes. And another spoiler: there’s no reading of the Will.
In this Hollywood-style reading of the Will, Carrie reads that Big left his ex-wife, Natasha Naginsky, one million dollars. And Carrie’s upset. Why would Big leave his ex-wife a million dollars? Well, that's a question for Big, and unfortunately, he's dead. If only Big had a copy of The Death Readiness Playbook. He might have realized that it's not enough to just make these decisions. Often, you need to explain them to the people who will be left wondering why.
But I’m not surprised to find an ex-spouse as a beneficiary under a deceased ex-spouse’s Will. So why is that? When I'm doing estate planning for someone who's divorced, I always ask to see the marital dissolution agreement. That's the agreement that dictates the division of property and other financial obligations between the former spouses. Sometimes those agreements contain obligations that continue after one spouse dies.
For example, I recently did an episode about estate planning for divorced parents who are required to maintain life insurance for their minor children. That’s Episode 95 and I’ll link to it in the show notes. The purpose is to make sure that if a parent dies while still obligated to provide child support, there's money available to do that.
But Big and Natasha didn't have children together. So could there be another legal reason for Big to leave Natasha money? Absolutely. Maybe their divorce agreement included an obligation to make certain alimony payments to Natasha, and the agreement required that obligation to be satisfied in full through a distribution from his estate if Big died before completing those payments.
So, when I see an ex-spouse receiving money under a Will, I don't automatically assume there's some great unresolved love story. Often, it's simply a legal obligation. But, that's not what happened here.
Eventually, Carrie and Natasha, Big’s ex-wife, have an uncomfortable encounter in a coffee shop. Carrie wants to know why Big left Natasha a million dollars. Natasha says she doesn't know. And then she says she doesn’t want the money. She tells Carrie to give it to charity.
Now, personally, I would have a difficult time turning down a million dollars. But Natasha apparently wants nothing to do with it. And that's her choice. But untangling herself from the money is not as easy as Natasha seems to believe.
If someone had a difficult relationship with the person who died, that alone might be reason enough to turn down an inheritance. And maybe that's what was going on with Natasha. Sometimes refusing an inheritance has very little to do with the money.
But Natasha doesn't get to decide what happens to the money just because she doesn't want it. And Carrie can't simply take the million dollars and give it to charity because Natasha told her to. This is where estate planning law gets interesting and a little complicated.
And actually, this is exactly the kind of thing I like to share in my free weekly email newsletter, the Death Readiness Dispatch.
Every Wednesday morning, I send out a little more of what we talk about here. Sometimes it's practical estate planning information or resources to help you get your affairs organized. Sometimes it's behind-the-scenes stories and photos, or just something I've been thinking about that week.
It's a way for us to continue the conversation beyond the podcast, and I'd love for you to be part of it. You can subscribe for free at deathreadiness.com/subscribe. That's deathreadiness.com/subscribe.
Okay, back to Natasha and her million dollars. The legal way to refuse an inheritance is to file a document called a qualified disclaimer.
A disclaimer is a formal refusal to accept property or an interest in property. In other words, someone leaves you something, and you legally decline to receive it. But there's a difference between saying, "I don't want that money," and executing a legally effective disclaimer.
For Natasha, we're dealing with two sets of rules: New York law, because that's where Big lived, and federal tax law. New York refers to this process as a renunciation.
Under New York law, a renunciation needs to be in writing, signed and acknowledged, filed with the appropriate court, and served on the person responsible for administering the estate.
And under federal tax law, Natasha needs to satisfy several requirements. The disclaimer must be in writing. She can't have already accepted the property or its benefits. And she can't direct where the disclaimed property goes.
Both the New York and federal requirements must be completed within 9 months of Big’s death. And, by the way, that 9-month deadline comes around much more quickly than you’d think.
Remember what Natasha said? "Give it to charity." Well, that's not how a disclaimer works. If Natasha properly disclaims the million dollars, she doesn't get to choose the charity that receives it.
She is stepping out of the line of inheritance, and the money passes according to the applicable provisions of Big's Will and New York state law. So, what happens to the million dollars? That's where things get even more interesting.
Let's pretend we're looking at Big's Will. We don't have the actual language of his fictional Will, so we're going to make some assumptions.
Imagine the Will says: "I give the sum of one million dollars to Natasha Naginsky." Period. That's it. There are no additional instructions telling us what happens if Natasha dies before Big, which is how the inheritance is treated if she disclaims it.
Ambiguity is a problem I try to avoid when I'm drafting estate planning documents. If the document doesn't tell us what to do, we may need to look to state law for the answer. Many states have a law called an anti-lapse statute.
And the concept is pretty straightforward. Imagine you leave money to someone in your Will, and that person dies before you. Does the gift simply disappear? Does it go to that person's children? Does it go to someone else?
An anti-lapse statute provides the answer when the Will itself doesn't. In New York, the anti-lapse statute protects an inheritance if the predeceased beneficiary is a sibling or descendant of the person making the Will and has their own descendants.
Let's use a hypothetical example. Imagine Big had a sister named Elizabeth. He leaves Elizabeth one million dollars in his Will, but Elizabeth dies before him, leaving two children. Unless there were contrary instructions in the Will, New York's anti-lapse statute directs that million dollars to pass to Elizabeth 's two children, five hundred thousand dollars each.
The idea is that the gift stays within that branch of the family instead of failing, or lapsing, simply because Elizabeth died before Big.
But Natasha isn't Big's sister and she isn’t his descendant. She's his ex-wife. So New York's anti-lapse statute does not protect a gift to her. If she properly disclaimed the money, and Big's Will didn't contain another provision directing where it should go, the million dollars would be distributed as part of his residuary estate. The residuary estate is the junk drawer of your estate, that drawer in your estate where everything ends up if it doesn't have another designated place.
Except that the stuff that ends up in your residuary estate usually isn’t junk. It’s often the largest percentage of the estate. Your Will might specifically leave your engagement ring to your daughter, ten thousand dollars to your nephew, and a piece of artwork to your best friend, and then everything else passes as part of your residuary estate.
Your residuary estate also catch gifts that fail because a beneficiary dies before you or disclaims an inheritance, depending on the terms of the Will and state law. Let’s see how this would work in Big’s fictional scenario.
Let's assume Big's residuary estate goes to Carrie. If Natasha properly disclaims the million dollars, and there isn't another provision in the Will changing the result, Carrie would end up receiving that money.
What if Big and Natasha had lived in Tennessee instead of New York? I practice law in Tennessee, and Tennessee's anti-lapse statute is broader than New York’s. Under Tennessee law, the descendants of a deceased beneficiary receive a gift even when that predeceased beneficiary wasn't a child or sibling of the person who made the Will.
And that means we would have a very different result. We learn in the show that Natasha had two sons after she and Big divorced. Let's imagine Big's Will contained the same simple million-dollar gift to Natasha, and we're applying Tennessee law.
If Natasha were treated as having died before Big and Big’s Will didn’t indicate otherwise, Tennessee's anti-lapse rules would result in the money passing to Natasha’s minor sons rather than to Carrie.
But think about the practical problem that could create. Natasha doesn't want the million dollars. She properly disclaims it. And now the money is headed to her children. If those children are minors, we're dealing with additional complications involving who can act for them and whether a disclaimer on their behalf would be legally permissible and in their best interests. Or, do they have to keep the estate open until Natasha’s children turn the age at which they can legally disclaim on their own? Natasha might not be able to escape that $1M.
Suddenly, refusing an inheritance has become quite an undertaking. And this is why I prefer to draft documents that tell us exactly what should happen rather than leaving us to figure it out by looking up default statutes.
If Big wanted to leave Natasha a million dollars, but didn't want the money to pass to her descendants if she couldn't or wouldn't accept it, I would state that clearly in the Will.
I’d say something like this:
"I give the sum of one million dollars to my former spouse, Natasha Naginsky, if she survives me. If she does not survive me, this gift shall lapse."
Notice what I've done. I've identified Natasha by her full name and her relationship to Big. I've specified that she must survive him. And I've addressed what happens if she doesn’t survive him.
The goal is to avoid leaving the answer to chance. And this is something I’d like you to think about when you're reviewing your own estate planning documents.
Now, you might be thinking that this is all a little ridiculous. How often does it actually happen that someone refuses an inheritance?
Well, I once had a beneficiary threaten to file a bar complaint against me because I kept sending him documents that I was legally required to send to him about his inheritance. I was helping with the final stages of an estate administration in Tennessee. Another attorney, who was also a family member of the person who died, had been handling the estate. But family emotions had been running high, and he decided it would be better to bring in a neutral third party.
And I was trying to get the estate closed. One of the things we needed to do was obtain receipts from the beneficiaries acknowledging their distributions. Except one beneficiary was not interested in cooperating. He didn't want the money that was sent to him and he didn't want to sign the receipt.
And he made it very clear that he never wanted to hear from me again. Unfortunately, I still had legal obligations to fulfill. There were procedures I needed to follow with the court because he wasn't signing the receipt, and I was required to send him notices about those proceedings.
So I sent the notices and he became increasingly agitated. He threatened to file a complaint against me with the Board of Professional Responsibility if I didn't stop sending him the documents, which I was legally required to send him.
Family relationships can be complicated. Sometimes an inheritance comes with emotional baggage that has absolutely nothing to do with the money.
Maybe you had a terrible relationship with the person who died and accepting the money feels like accepting something else you don’t want. Or maybe you simply don't want to be involved in the family drama. Those are all understandable reasons for wanting to walk away.
But the legal system doesn't allow you to walk away just because you've decided you're finished with the situation. There may still be notices, filings, deadlines, and other legal procedures that have to be followed.
And that's what Natasha didn't understand when she told Carrie to give the million dollars to charity.
If someone leaves you money or property and you don't want it, there are a few things I want you to understand. First, you cannot simply tell the executor to give it to someone else.
Second, if you might not want to keep the inheritance, then make sure you don’t accept or exercise control over it. For example, don’t take the money and put it in your bank account, even if you don’t spend any of it. This matters because accepting the property or its benefits prevents you from making a qualified disclaimer later. Talk to an attorney first about whether a disclaimer makes sense.
Third, understand that disclaiming an inheritance and deciding who receives it instead are two different things.
If you want to choose the recipient, accepting the inheritance and making a separate gift is an option. But that comes with its own potential tax and legal consequences.
And finally, pay attention to the deadlines. A qualified disclaimer for federal tax purposes has a nine-month deadline, and state law can impose additional requirements. This isn't something you want to put on your to-do list and revisit a year later.
And that's true of so many things in estate planning. There are deadlines, legal requirements, and little details that most of us would never think to ask about until we're dealing with them.
That's one of the reasons I started my free weekly email newsletter, the Death Readiness Dispatch.
Every Wednesday morning, I send out a little more of what we talk about here. Sometimes it's practical estate planning information or resources to help you get your affairs organized. Sometimes it's behind-the-scenes stories, photographs, or a little more about what's going on in my own life.
If you've enjoyed getting to know me and find the information I share helpful, I think you'll enjoy the newsletter, too.
You can sign up for free at deathreadiness.com/subscribe. That's deathreadiness.com/subscribe.
Now, before we leave Carrie and Natasha to sort out their complicated relationships, let's talk about what this whole million-dollar mess can teach us about our own estate plans.
For one thing, Hollywood loves a dramatic reading of the Will. For another, a million-dollar inheritance can create a surprising amount of trouble when the person receiving it doesn't actually want it.
But there's a larger estate planning lesson here. When you're creating your estate plan, you need to think beyond who you want to inherit your property. What happens if that person dies before you? What happens if the money ends up going to someone you never intended to receive it?
Those aren't necessarily questions you'd think to ask on your own. And that's one of the reasons estate planning attorneys exist. To help you think through the things you might not realize you need to think about.
It’s kind of like the man painting the crosswalk. He knew exactly what was about to go wrong. I had absolutely no idea. Fortunately, he spoke up before I sent 18 feet through his freshly painted white lines. And in estate planning, it's a whole lot better to identify those problems before someone dies than to try to clean them up afterward.
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
