If someone does not wish to receive a specific inheritance, they can disclaim it. However, what happens if the person is a minor? It is up to the parents to disclaim the inheritance on the minor’s behalf. Recently, a Brooklyn judge rejected one parent’s attempt to do that.
Sharon Lindsay passed away with approximately $6M in assets to be divided. Because she did not have a will, under New York law her assets were to be divided between her husband, son, and daughter. However, the children’s portion was liable for $200,000 in New York estate taxes.
In an effort to avoid those taxes, the son and daughter disclaimed the inheritance. That would have given their share of the inheritance to their father. It would not be subject to the estate tax because of New York’s spousal inheritance.
However, the flaw in their plan was that the daughter, Kimberly Friedman, had an infant child who stood to inherit her mother’s share under New York law. Friedman attempted to disclaim the infant’s share. Nevertheless, a Brooklyn judge disallowed the disclaimer.
The infant will inherit a share of Lindsay’s estate and will have to pay state estate taxes.
The Brooklyn Daily Eagle has more on the story in “Brooklyn judge blocks heir’s attempt to avoid N.Y. tax on $6M estate.”
The judge reasoned that it was not in the infant’s best interests to allow the disclaimer. According to the judge, the infant was better off receiving the inheritance subject to the estate tax than possibly never receiving it at all. The problem: there was no agreement between the children and their father that they would someday inherit the estate through him.
This case highlights the importance of estate planning. Lindsay had not done any estate planning and it is possible the entire issue could have been avoided if she had an estate plan.
Do not delay what is your own personal responsibility.
Please contact our office today at 239-225-7911 to schedule an appointment with Barbara M. Pizzolato if you are interested in protecting your legacy and need to create or update your estate plan. You may also wish to attend one of our free seminars.
Reference: Brooklyn Daily Eagle (February 20, 2015) “Brooklyn judge blocks heir’s attempt to avoid N.Y. tax on $6M estate.”
