Why disclaim an inheritance?
Because the deceased had substantial debts
Substantial debts are the main reason for heirs to refuse an inheritance. Indeed, when someone dies, he may leave some debts behind. Yet, those debts are also part of the inheritance, just like the deceased’s assets. In some cases, the amount of debts exceeds the amount of the bequeathed assets. The inheritance is thus called “insolvent” : accepting it would mean reimbursing the deceased’s debts! In such a case, the heirs have the right to disclaim the inheritance.
The heirs may also accept the inheritance “under benefit of inventory”. This means that an inventory of all the debts and assets of the deceased person will be compiled so that the heirs are able to take a decision with full knowledge of the situation.
Because you want someone else to receive the inheritance
Some may also decide to disclaim an inheritance to have their own descendants benefit from it. It might happen, for example, that the heirs do not really need the bequeathed assets and that they’d rather have their children receive them directly. To do so, the heirs simply have to refuse the succession so that the “substitution mechanism” applies. This mechanism also prevents you from paying inheritance taxes twice.
Let’s take the example of Michel, who has one daughter, Marie, who has three kids herself. If Marie accepts the inheritance, she will have to pay a certain amount of inheritance taxes (proportional to the assets that she inherits). Years later, when Marie passes away, her three kids may have to pay inheritance taxes on the assets that they received, which might be assets that Marie inherited from Michel years ago. Yet, if Marie decides that she does not need Michel’s asset, she can refuse the inheritance to have her children inherit directly. Inheritance taxes will have to be paid once and... that’s it!
Please note that this mechanism does not allow to reduce the amount of inheritance taxes to be paid.
Let’s imagine that Claude has had a child, Martin, with Denise, who passed away. Claude then found a new partner, Yvette, but did not marry her. To make sure that Yvette inherits from parts of his assets, Claude drafted a will where he appointed her as a universal legatee. Yvette is thus entitled to inherit from half of Claude’s assets. Yet, she already has a substantial estate and has always considered Martin as her son. She thus decides to disclaim the inheritance so that Martin inherits from all of Claude’s estate. In that case, Martin will have to pay inheritance taxes as “Claude’s child” on half oh the inheritance (the one that he was legally entitled to). However, on the other half, he will have to pay inheritance taxes as “a stranger”. Indeed, it was initially Yvette’s part, who, as partner with no official family relationship to Claude, is considered as a “stranger”.
To sum up, disclaiming an inheritance must never prejudice the state. In other words, you may never pay less inheritance taxes than those that should have been paid if no one refuses the inheritance.
How to disclaim an inheritance?
It is actually quite simple: to refuse a succession, you only have to meet with a notary to file a “disclaimer”. The notary will then draft a notarial act. If the net amount of the assets that are part of the inheritance does not exceed €5,219.21 (August 2020), the procedure is free. You will only have to certify on your honour that you only know of assets amounting to less than €5,219.21. If the assets exceed this amount, you will have to pay registration fees and notary fees for the notarial act.
What happens next?
Once the heir signs the official disclaimer, he is no longer considered an heir. Indeed, this decision is irrevocable. Even if the “ex-heir” then hears about forgotten or newly-found assets that should have been part of the inheritance...
There is only one exception to that rule: the “ex-heir” must change his mind within 30 years AND no other heir must have accepted the inheritance before.
When an heir refuses a succession, he is no longer responsible for any of the deceased’s debts (except for funeral expenses) and his share of the inheritance is distributed among the other heirs (or to his children if he decided so). Furthermore, this person does not have to report the assets that he might have received from the deceased as an advance on inheritance (unless it prevents the other heirs from receiving their minimal share of the inheritance).
As you may have realised, disclaiming an inheritance is more common than we think! If you are also thinking about refusing a succession, whatever the reason, do not hesitate to seek the help of the Morning Blue’s experts, who will be able to support you and provide you with advice.