Disclaiming & Variation
Disclaimer
A person need not accept a benefit either by way of gift or inheritance. A gift must be accepted to take effect. Generally, the slightest indication of acceptance is sufficient, and acceptance will be readily inferred in the circumstances.
A gift or benefit received on death may be disclaimed. A disclaimer may be by formal deed, in writing or by conduct.
A beneficiary cannot be made to accept it. However, if the beneficiary does accept an inheritance, he must accept it subject to the conditions that apply, other than those which are invalid at law.
No Directed Disclaimer
However, a disclaimer may not be framed in such a way as to direct the asset to pass in a particular direction, even to other beneficiaries under the same will or intestacy. If the disclaimer purports to transfer the asset, then there are two taxable events, an inheritance followed by a gift.
It is not possible to disclaim in favour of another. Where a person disclaims, the assets pass in accordance with law to the persons next entitled whether on intestacy or under the will.
A purported disclaimer in favour of another is likely to be interpreted as an acceptance and subsequent gift leading to a possible double taxation charge.
A disclaimer is usually undertaken by deed. It can, in principle, be undertaken verbally or by conduct.
Disclaiming on Intestacy
In the case of intestacy, the property passes to those next entitled, as if the person disclaiming had not existed
Where a number of persons are equally entitled with the person who disclaims, the remaining persons in the class receive a larger share. Where there was nobody remaining in that class concerned, the next class take the disclaimed benefit.
Legislation was passed in 1997 to remove doubt as to the effects of disclaimers on intestacy. In particular, it had been argued that the benefit might vest directly in the State, rather than in the next group of persons entitled.
Will
The 1997 legislation provides that in the case of a disclaimer, after the Act commences, the person disclaiming is deemed to have predeceased the deceased. Accordingly, the will takes effect as if he had died beforehand.
The net effect of this will, in most cases, be that it goes to the remaining members of the same class or, if he is the last member of that class, to the next class entitled.
Effect of the 1997 Act
Disclaimer of entitlement will also remove entitlement to take out a grant. The right follows the interest, and when the interest is disclaimed, it no longer applies.
Where the person is not the spouse or lineal ancestor of the intestate, he is deemed to have died without issue. Therefore it will not go to his descendants, unless he is the spouse or ancestor, spouse, parent or grandparent of the deceased.
The effect is that a disclaiming sibling or more distant relative or child does not by the disclaimer vest the assets in his prospective beneficiaries but other beneficiaries of the intestate.
CAT
Where a person does not accept or disclaims a benefit, he is not deemed not to have received it for CAT purposes. The same treatment applies to a renunciation or a disclaimer of statutory rights under the Succession Act or the equivalent. A disclaimer waiver or renunciation is not a disposition for CAT purposes. The person who takes the benefit is deemed to have taken it from the donor/deceased.
Unlike the position in the UK and under Irish CAT, there are no provisions allowing the rearrangement of benefits within a certain period of death without further inheritance tax consequences. This is in contrast to Capital Gains Tax, where there is provision for a rearrangement on a tax-neutral basis within two years and Ireland and the UK.