[swanee]

I need to keep my income below a certain level to receive assistance with extensive and ongoing medical bills. I am to receive a sizable inheritance, would like to disclaim it and have it go to another sibling. Can this be done?

[ebaines]

Yes, you can disclaim the inheritance. Talk to the executor about this quickly, before any estate assets are transferred to you. If you disclaim, the assets will then go to the contingent heir as specified in the will. In other words, you can not specify who gets the inheritance; you can only disclaim it.

If you actually do inherit the assets and then gift them to your sibling, the tax issues you face are:

1. A few states (not many) have inheritance tax. Tell us where you live and we can check that for you.

2. If the gift to your sibling is in excess of the gift tax exclusion ($1M), you'll owe gift tax on the excess over $1M. Even if the value if less than $1M, you will have to file a gift tax form (though no tax is due). This can also have impact on your own estate tax planning, so it would be good to consult an expert in estate planning before doing this.

Note that whichever way you go the inheritance is not considered income from a tax persepective, so that's not the reason to disclaim your iheritance. Of course if you do inherit then it increases your net worth - which may affect your benefits.

[ScottGem]

While I agree with ebaines that the inheritance will not be considered income. Certain programs that provide public assistance will include windfalls like an inheritance against your minimum levels.

On the other hand, such a windfall may require that you use it to reimburse what has been paid on your behalf without triggering a cessation of benefits. I would suggest you ask the program directors about that. In that case you can reimburse the taxpayers who have been footing the bill for your care.