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Estate Planning

6 Reasons to Reject a Bequest

Think twice before accepting an inheritance

Congratulations! You're named as a beneficiary in a will and due to inherit something you may not have expected. But don't get too excited — yet. On occasions, inheritances are more like curses than blessings.

See also: Good reasons to change your will.

Here are six scenarios when you might want to reject a bequest.

1. It's a smart tax move. Is the next person in line to receive the bequest close to you and in a lower tax bracket? Jeff Scroggin, a tax and estate-planning lawyer in Roswell, Ga., offers this example:

Your widowed mother passes, designating you as the beneficiary of her $40,000 individual retirement account and your college-bound daughter as the contingent beneficiary. You're in the top tax bracket, and your daughter is in the bottom. If the money's going to end up at the same place — say, your daughter's college — consider allowing the bequest to pass to your daughter and having it taxed it at the lower rate. Of course, a windfall might affect her ability to obtain financial aid, so you should weigh that factor before declining the bequest to allow your daughter to receive it. 
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