Not every inheritance is a gift you want to receive. For some Australians, saying “no” to an inheritance is the right financial or personal choice. Whether it’s to avoid tax complications, protect Centrelink benefits, or prevent family conflict, refusing an inheritance must be done carefully to stay within Australian law. This comprehensive guide from LegalFinda explains the process, implications, and when expert legal help is essential.
Why Do People Refuse Inheritances in Australia?
People refuse inheritances in Australia for several practical, financial, and personal reasons. In many cases, it’s not about rejecting a gift—it’s about avoiding legal or financial complications that come with it. Some beneficiaries worry about tax impacts, government benefits, or family disputes that could arise after accepting the estate. Others simply prefer not to take on complex assets or obligations.
- Financial implications: Accepting property or shares can increase your assessable assets and affect Centrelink payments or child support calculations.
- Debt and tax exposure: Inherited assets might carry maintenance costs or future capital gains tax (CGT) liabilities when sold.
- Family or moral reasons: Some beneficiaries refuse to keep family harmony intact or because they believe another relative should receive the benefit instead.
- Estate complications: Disputed or debt-laden estates can involve drawn-out legal processes, so some choose to step aside entirely.
In short, refusing an inheritance can be a strategic or emotional decision—but it must be done through a valid legal disclaimer to ensure it’s recognised under Australian succession law.
How Refusing an Inheritance Works
Refusing an inheritance means you renounce your legal right to receive assets left to you in a will or under intestacy. The process, known as disclaiming an inheritance, is governed by state legislation such as the Succession Act 2006 (NSW) or Administration and Probate Act 1958 (VIC). Once your disclaimer is accepted, the inheritance passes to the next eligible beneficiary as though you had never been named.
This decision is final—you cannot reverse it once the estate has been distributed. That’s why legal and financial advice is crucial before you act.
How to Refuse an Inheritance in Australia
The legal process for refusing an inheritance varies slightly between states, but the general steps remain consistent. Timing is critical—once you accept any benefit, you lose the right to disclaim.
- Seek professional advice: Consult a solicitor experienced in succession law to understand the implications of refusal on taxes, benefits, and debts.
- Prepare a written disclaimer: Clearly state that you refuse the inheritance, sign, and date it before a witness.
- Deliver it to the executor: Submit your signed disclaimer to the executor or trustee managing the estate.
- Register or lodge if required: In some states, the document must be filed with the probate registry or included in court records.
- Confirm receipt: Obtain written confirmation from the executor acknowledging your refusal.
Failing to complete these steps before accepting assets can make the refusal invalid, leaving you legally responsible for those assets.
Legal and Financial Consequences
Refusing an inheritance can have downstream effects that go beyond losing property rights. Depending on your situation, it may affect social benefits, taxes, and even family relationships.
- Centrelink treatment: A refusal may still be assessed as a “deprived asset” if it appears designed to retain benefits. The inheritance value could be counted for up to five years.
- Creditors and bankruptcy: If you refuse to avoid paying debts, creditors can challenge your disclaimer under the Bankruptcy Act 1966 (Cth).
- Tax implications: While you don’t pay tax on a refusal, future CGT or stamp duty may apply once assets transfer to another beneficiary.
- Family provision limits: Once you refuse, you usually lose the right to later claim a greater share of the estate.
Example: How a Disclaimer Works in Practice
Case Study – Sarah (Queensland): Sarah was left a share of her late mother’s property but worried it would affect her pension. Her lawyer drafted a disclaimer under the Succession Act 1981 (QLD), which she lodged with the executor before distribution. The share passed to her brother, and Sarah kept her benefits intact. This case shows how timely legal advice helps beneficiaries avoid unintended financial loss.
Inheritance Refusal Rules by State
Each Australian jurisdiction allows disclaimers, though the governing legislation differs:
- New South Wales: Succession Act 2006 (NSW)
- Victoria: Administration and Probate Act 1958 (VIC)
- Queensland: Succession Act 1981 (QLD)
- Western Australia: Administration Act 1903 (WA)
- South Australia: Administration and Probate Act 1919 (SA)
- ACT, Tasmania & Northern Territory: Apply similar provisions under local probate law.
Although the process is broadly uniform, small procedural differences mean getting advice in your specific state is important.
How Australia Differs from Other Countries
Australia’s approach to inheritance refusal is notably more straightforward than in many countries. In the United Kingdom and United States, beneficiaries often face inheritance tax or complex court filings when disclaiming assets. In Australia, a simple written notice to the executor is usually enough—provided it’s executed before accepting any benefit. However, once finalised, your decision is legally binding and cannot be undone.
Frequently Asked Questions
Still unsure about how inheritance refusals work? Here are some common questions Australians ask before deciding.
Can I refuse part of an inheritance but keep another?
Yes, you can reject one asset while keeping another, as long as the disclaimer is clear and submitted before you take possession of any property or funds. Once you accept part of the inheritance, further disclaimers may be invalid.
Does refusing an inheritance affect my Centrelink payments?
It can. Centrelink may view your refusal as a disposal of assets if it appears you declined to preserve or increase your benefits. In that case, the inheritance’s value may still count towards your asset test for several years.
Can I change my mind after refusing an inheritance?
No. Once a valid disclaimer is lodged and accepted by the executor, it’s legally binding. The estate is redistributed, and your right to the inheritance permanently ends.
Is there a time limit to refuse?
While there’s no fixed national deadline, the refusal must occur before you accept or benefit from any assets. Executors can also set timeframes to finalise estate distribution.
Conclusion: Get Expert Advice Before You Act
Refusing an inheritance can protect your financial stability—but only if handled correctly under Australian law. The process demands precision and timing, as one misstep can have long-term consequences for taxes, benefits, or family rights. Before signing any documents, speak with a qualified succession lawyer to ensure your decision is fully compliant and strategically sound.
