A will is an important legal document, and anyone aged 18 or over can make one. Making a will ensures that an estate is ultimately distributed according to the testator’s own wishes. However, as a beneficiary of a will, what if you don’t want to inherit the estate?

What is a beneficiary of a will?

Beneficiaries of a Will are the individuals or entities (such as charities) named in a will as entitled to receive all or part of the deceased’s estate.

Rights of a beneficiary of a will

In New South Wales, as a beneficiary of a will, you are entitled to the following rights:

• The right to receive a copy of the will;
• The right to be informed of your specific entitlements and the expected timeframe for receiving your inheritance;
• The right to receive a statement setting out the beneficiaries’ entitlements and how the estate will be distributed;
• Within 12 months of the deceased’s passing, beneficiaries are entitled to receive their entitlements (unless the will provides otherwise or where mitigating circumstances have been explained);
• The right to be kept informed at any time while the executor administers the estate;
• The right to be informed of any liabilities, including debts and taxes owed by the deceased’s estate;
• The right to be informed of any legal proceedings brought against the deceased.

Reasons a beneficiary may refuse to inherit

Not every beneficiary of a will is willing to accept the inheritance. When a beneficiary refuses to accept a bequest, there are usually legitimate or understandable reasons. For example, a beneficiary may renounce the inheritance for financial or personal reasons.

1. Personal reasons

A beneficiary may not wish to inherit for personal reasons. The beneficiary may have a complicated or even painful history with the deceased. Given that history, the beneficiary may feel unable to accept the inheritance. The beneficiary is entitled to refuse, but should take time to make the decision and ensure the matter is discussed with the executor.

Executors of a Will are appointed by the testator in the will. The executor’s role is to administer the deceased’s estate in accordance with the instructions in the will (or, where there is no will, in accordance with the law), pay all debts, and distribute the assets. The executor has a duty to protect the estate, and to protect the interests of those who will ultimately receive it — namely, the beneficiaries.

2. Financial reasons

A beneficiary may also wish to decline an inheritance for financial reasons. For example, based on the following financial considerations:

• A beneficiary who already has substantial wealth may prefer that another person benefit from the estate.
• A beneficiary may not wish to take on the tax liabilities associated with a testamentary gift.
• A beneficiary may be concerned that the inheritance will affect their eligibility for social security payments.

3. Inconvenience

Sometimes a bequest under a will is more trouble than it is worth. For example, the testator may leave a billiard table to a beneficiary, but the beneficiary may wish to refuse the gift because of the hassle, the cost of transport, or a lack of storage space. In that situation, the beneficiary can simply choose to decline the bequest to avoid the associated inconvenience.

For another example, the testator may leave their pets to a beneficiary, and some beneficiaries may be unable to keep pets or unwilling to own them, and therefore decline the bequest. With this in mind, the testator should appoint a secondary beneficiary for the pet and leave that person a cash bequest to offset the cost of caring for the animal.

How can a beneficiary of a will refuse to inherit?

Under Australian law, a beneficiary who does not wish to inherit may refuse to do so. In that case, the executor and the beneficiary can sign a legal document disclaiming the beneficiary’s entitlement to the estate. The executor can then pass the gift on to the next eligible beneficiary.

Legally, a beneficiary should keep the following points in mind:

• A beneficiary cannot disclaim a gift before the testator passes away.
• A beneficiary must refuse a gift by deed (in writing and conduct).
• A beneficiary cannot renounce an inheritance after having previously accepted the gift.
• If the testator made the will overseas, the beneficiary should check their right to refuse under the law of that country.

Entering into a Deed of Family Arrangement

If a beneficiary does not wish to take their inheritance under the will, they can enter into a Deed Of Family Arrangement, which is essentially an agreement to vary the terms of a valid will. All interested parties, including the beneficiaries and the executor of the estate, must sign the Deed of Family Arrangement. In addition, all interested parties must be adults with mental capacity who consent to the terms of the deed.

A Deed of Family Arrangement can redistribute an estate to reflect the financial needs of the individual family members. For example, if one parent passes away and divides their estate equally among their children, the siblings may agree to redistribute the estate so that a sibling in financial hardship receives the inheritance.

In closing

As discussed in this article, a beneficiary of a will may choose to renounce an inheritance for personal, financial, or other reasons. If, as a beneficiary, you wish to refuse a bequest under a will, you can do so through a Deed of Family Arrangement. In any event, it is advisable to seek professional legal advice to ensure you are not held responsible for gifts, debts, or other matters.