Can a Beneficiary Refuse or Disclaim an Inheritance in Alberta?

Some beneficiaries do not want what they have been left. The reasons vary: concern about debts, tax, family conflict, or a wish for the gift to go to someone else. Knowing where the gift goes if you refuse matters, because it may not go where you expect.

This article explains how Alberta's Wills and Succession Act treats a disclaimed gift and what to think about first. It does not set out a procedure for disclaiming, because that is something to confirm with a lawyer for your situation.

This article covers the law of Alberta.

What the law says about a disclaimed gift

The Wills and Succession Act treats a disclaimed gift as one way a gift fails. The same order of substitution that applies when a beneficiary dies first applies where a gift is void, contrary to law or disclaimed.

The Act is quite brief on this point. It mentions disclaimer in that section as one way a gift fails, and does not set out in the pages that deal with it a separate procedure, form or timing for a disclaimer. Before relying on any approach, get legal advice on how a disclaimer should be done and by when.

Who receives the gift instead

The order of substitution is as follows.

• First, the alternate beneficiary named in the will, if any.
• If there is no alternate beneficiary and the beneficiary was a descendant of the testator, the beneficiary's descendants who survive the testator.
• If neither of those takes, the surviving residuary beneficiaries named in the will, in proportion to their interests.
• If none of those people can take, the property is distributed under Part 3 as if the testator had died intestate.

The descendant step applies only where the beneficiary who refuses was a descendant of the testator. A friend, sibling or charity does not pass the gift to their own children under that rule. A will can also name an alternate, who takes first. Whether other wording in a will can change the default order is something a lawyer should confirm.

If there is no will, or the gift is part of an intestacy

If the property falls to be distributed on intestacy, it follows the Part 3 rules. A surviving spouse or adult interdependent partner takes the entire estate where there are no descendants, or where all of the intestate's descendants are also descendants of that spouse or partner. Where some descendants are not also descendants of the spouse or partner, the spouse or partner gets the greater of the prescribed amount or 50% of the net value of the intestate estate, and the rest goes to the descendants. The prescribed amount is $150 000.

Without a spouse or partner, the estate goes to the descendants, with each surviving child taking one share and a deceased child's share passing to that child's descendants. If there are no descendants and no spouse or partner, the estate goes to the parents in equal shares if both survive. Which of these applies when one person steps aside depends on the family, so ask before you decide.

Risks to think about first

• Debts of the estate: gifts are subject to prior payment of the deceased's debts. How debts affect your particular gift depends on the estate, so it is worth confirming with a lawyer.
• Tax: a person who dies is treated as having sold their property just before death, and any gain or loss is reported on the deceased's final return, with the tax paid by the estate rather than the beneficiary. That treatment is deferred when property goes to a spouse or common-law partner who was a Canadian resident at death and is locked in for them within 36 months, and the legal representative can elect out of this property by property. Check what, if anything, changes for you if you refuse.
• Creditors and bankruptcy: an inheritance received by a bankrupt before discharge can fall to the trustee in bankruptcy. Some property is excluded, such as property held in trust for another and exempt property. Whether refusing is possible or effective in that setting is something to confirm.
• Family: your refusal may send the gift to someone you did not intend, or to the other residuary beneficiaries.
• Having already accepted something: whether you can disclaim after taking a benefit should be confirmed before you take anything.

What to do next

• Get a copy of the will and identify the gift and any alternate beneficiary.
• Work out who would take if you refused, using the order above.
• Do not accept, spend or transfer anything from the gift until you have advice.
• Ask a lawyer how a disclaimer is properly made and what deadline applies.
• Ask an accountant about tax effects for you and the estate.
• If you are in or near bankruptcy, raise it at the start.

Frequently asked questions