Why Would You Renounce an Estate
Real Estate

Why Would You Renounce an Estate?

Why would you renounce an estate? In some instances, it may be wise to renounce the estate. For example, if the deceased has not made any provisions, the succession is said to devolve “intestate”: without a will. The transmission of the estate to the heirs is then organized by law.

 There are three cases in which there is no succession:

 – the heirs refuse the succession; this is known as the renunciation of the succession;

 – an heir is unworthy of the right to succession;

 – there are no heirs or legatees, known as vacant succession.

 Renunciation of the succession pure and simple

Why Would You Renounce an Estate

 In principle, the heirs inherit the deceased parent’s estate simply because of the law.

 Renunciation of succession: in two cases

 In two cases, it may be advantageous to renounce the succession:

 – the existence of debts: when the deceased’s assets include liabilities that exceed the assets, the heirs should renounce the succession: the heirs are not obliged to pay the deceased’s debts beyond the value of the assets received, and their own assets are protected against impoverishment;

 – to benefit descendants: when a child is called upon to inherit from his parents, even though he has children, he may renounce the succession in favour of these children. In applying the mechanism of representation, the grandchildren of the deceased share in the inheritance, their parent should have received.

 Example: X dies with an estate of $200,000, leaving 2 children, Y and Z, and two grandchildren, V and W. In principle, Y and Z share X’s entire estate. But Y, the father of V and W, renounces the estate: V and W represent him; they receive half of X’s estate (the other half goes to Z). Thus, Z gets $100,000, and V and W each receive $50,000. 

 Good to know: renouncing the estate to benefit a child avoids double payment of inheritance tax: only the grandchildren pay the tax (the renouncing party is not taxable).

 Important: note that this does not apply if the deceased had anticipated his inheritance and excluded an heir by will. If representation works in the event of an heir’s unworthiness, it does not apply to the descendants of an heir disinherited by will.

 Procedure for renunciation of the succession: before 4 months after the death

 The renunciation must be made within 6 months of the death.

 The declaration of renunciation of inheritance is addressed or filed by the heir or the notary at the clerk’s office of the judicial court of the place where the inheritance was opened. The registry records the declaration in a register kept for this purpose and sends or issues a receipt to the declarant or notary. 

 Renunciation of succession: the case of the inheritance agreement

 In this case of renunciation of the succession, it is renunciation in favour of collateral.

 In principle, children inherit from their parents at the time of death: the children share equally in the entire estate of the deceased parents.

 If a fragile child (mentally or physically handicapped, ill, etc.), the parents may wish to allocate a larger share of the inheritance to that child than to the other children.

 The inheritance pact allows the parent wishing to benefit a fragile child to bequeath or give him/her part of the inheritance reserve of the brothers and sisters of the weak child who renounce it.

 Options for renunciation in favour of a collateral

Why Would You Renounce an Estate

 They have several possibilities:

 – bequeath the entire available portion to the fragile child via a will or a donation;

 – establish an inheritance agreement: the parents pass on to the fragile child – in addition to the available portion – part of the inheritance reserve of his or her brothers and sisters.

 Waiver of inheritance: inheritance agreement procedure

 The inheritance agreement is an authenticated document drawn up in the presence of two notaries.

 It requires the double consent of the parent and the renouncing child.

 The renouncing child undertakes to renounce any action for reduction of the estate: he or she renounces part or all of his or her inheritance reserve.

 The renunciation is stipulated in favour of a beneficiary named by name: the fragile child.

 Good to know: the descendants of the renouncing person are bound by the agreement; they do not represent their renouncing parent. The pact may be revoked, at the request of the renouncing party, if the latter finds himself in a state of necessity or if the beneficiary of the renunciation is unworthy.

Hope this post is helpful to you. On the contrary, this article will be helpful if you are looking to accept a succession: 5 Documents Needed for a Succession.

 

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