What if I don’t want to inherit? – disclaimers

If you don’t want to inherit, you can sign a ‘disclaimer’.

A disclaimer is a legal document that says you choose not to take the inheritance that, legally, you are entitled to.

It may be a disclaimer of something you are given in your loved one’s will.

Or it may be a disclaimer of what you are due to inherit by law because your loved one died without a will.

If you sign a disclaimer, your part of the inheritance goes instead to whoever would get it if you had died just before your loved one (with the same children or other descendants as you actually had when your loved one died). A disclaimer does not let you specify who gets it instead of you.

For example, if Bob dies without a will, his surviving spouse or partner gets his personal chattels and the first $155,000 of everything else.

Imagine that Bob’s widow, Jane, decides to let everything go to Bob’s children instead.

If Jane had died before Bob, everything would have gone to Bob’s children. So Jane can sign a disclaimer and, as a result, everything will go to Bob’s children because they are the next in line.

However, if Bob had two children from previous relationships and three children from his marriage to Jane, Jane cannot use the disclaimer to say that everything should go only to the three children from his marriage to Jane.  If Jane signs a disclaimer, the other two children will share equally along with those three children.

You cannot legally disclaim your interest unless you are over 18 and ‘of sound mind’. However, the High Court can authorise the disclaimer on your behalf.

A disclaimer is often appropriate when someone who died without a will was married, and separated but not divorced, and had children. The law says that the ex-spouse still inherits, even if they had no contact with the deceased for many years.

You may be legally disadvantaged if you voluntarily give up an asset or possible income. For instance, you may be expected to use it to pay creditors. It can also count against you if you subsequently need government financial assistance.

However, if certain conditions are met, you are ‘deemed for all purposes neither to have become entitled to nor to have disposed of the disclaimed interest or any part thereof’. (Administration Act 1969 section 81(5)(b).)

Those conditions are set out in Section 81 of the Administration Act 1969.

Firstly, the disclaimer must relate to everything you are to inherit from your loved one. You cannot accept part of the inheritance and disclaim the rest.

Secondly, the disclaimer must be made within 1 year after the date of (the first) probate or letters of administration in the estate, unless the High Court allows an extended period.

Thirdly, none of these can apply:

• you have already accepted or used some of the inheritance;
• you have committed it to someone else;
• you are paid or receive anything of value for the disclaimer;
• the disclaimer says who is to get it instead of you;
• you are bankrupt when the disclaimer is made.

Finally, the disclaimer is irrevocable – once you have signed it, you cannot change your mind.

When you sign the disclaimer, that signature must be witnessed by at least one independent adult witness who signs the disclaimer and provides also their full name, occupation, and address.

The disclaimer must be delivered to your loved one’s ‘administrator’ (whoever has been granted probate or letters of administration for your loved one’s estate).

If the above conditions cannot be met, it is still possible to sign a disclaimer. However, unlike a disclaimer that complies with Section 81, it won’t protect you from possible legal consequences of having been entitled to or disposed of the property in question.

You still cannot use a disclaimer to specify who else will receive the inheritance instead of you. If you want someone specific to get it, and if they are not the next in line by law, you may prefer to accept the inheritance and then gift it to your preferred recipeients.

In your own case, please do obtain your own specific legal advice. There may be relationship-property issues, tax issues, benefit issues, or other implications which you need to consider.

We can prepare a disclaimer for you, but we will not give specific legal advice to the person who is going to sign it.

Nor will we give specific advice beyond this general guidance.

To prepare a deed of disclaimer for $300 (including GST), use the automated interview (bot) at this link: https://au.bot.joseflegal.com/m2rgDDkx/deed-of-disclaimer

We will review and edit the draft document and send it to you when payment is confirmed.

 

 

Cheryl Simes

29 March 2024