Giving Up Your Inheritance: Assignment
As you probably already know, California allows you to disclaim your interest in an inheritance. Disclaiming an inheritance is simply the same as refusing an inheritance. If you disclaim your inheritance, it will be as if you “predeceased” the decedent, and the assets will be treated as though another person inherited them. In California, you can also make what is called an “assignment” if you do not want or need an inheritance. An assignment works differently from a disclaimer. Below is more about assigning inheritance.
What Is an Assignment of Inheritance?
If you receive an inheritance that you do not need or want, or if you receive an inheritance that you would prefer someone else receive, you can make an “assignment.” An assignment occurs when you transfer all or part of your inheritance to someone else.
The person making an assignment is known as an “assignor,” and the person receiving it is known as the “assignee.” Generally, an assignment is like a gift by the assignor to the assignee.
There are legal steps to be taken for an assignment to happen. An assignment is not an informal transfer. After all, transferring your inheritance to another person goes against what your deceased loved one designated or what California law requires based on familial relationships. Assignments are executed in writing and delivered to the executor of the estate. An assignment must be filed with the probate court before the transfer can be done.
If you are thinking of assigning your inheritance, you need to note that assignments create tax issues for both the assignor and assignee. Indeed, some tax issues can be avoided with an assignment, but you’d need to speak to a lawyer or tax advisor to determine the tax implications that apply to your case.
Reasons for Assignment
People assign assets for various reasons. The following are some of the reasons why people assign their interest in an inheritance;
- To avoid gift tax if they don’t plan to use the money themselves
- To exchange their inheritance for an immediate cash payment from a third party
- To give a share in the estate to an accidentally omitted beneficiary
Assignment vs. Disclaimer
As already mentioned, assignments are different from disclaimers. Firstly, when it comes to assignment, you inherit the property and then assign it. On the other hand, you do not get any share of the inheritance with a disclaimer.
Secondly, if you assign your inheritance, you can choose who gets it. You can assign your inheritance to anyone you want. On the other hand, when you disclaim your inheritance, you have no direct say in who gets it. If you disclaim an inheritance, the beneficiary or heir next in line will likely inherit it.
Lastly, there is no time frame for assignment, whereas you generally have nine months for a disclaimer.
Because there is no time frame for assignment, people who don’t want or need their inheritance, who accidentally pass the required nine months for a disclaimer, usually end up assigning their inheritance.
In conclusion, it is crucial to note that you cannot undo an assignment. In other words, transferring your inheritance rights is an irrevocable act.
Contact The Probate Guy
When it comes to assignments and disclaimers, making the right decision is easiest when you have the support of a skilled attorney. Contact the experienced and dedicated California probate attorney, Robert L. Cohen – The Probate Guy – to schedule a telephonic consultation.