Can You Renounce an Inheritance in British Columbia?

Sometimes a beneficiary does not want what a will leaves them. The reasons vary: a tax worry, a fear that a creditor will take the gift, a wish to let someone else benefit, or a family dispute. The first question is whether you can simply say no, and what happens to the gift afterwards.

In British Columbia, the rules you can point to clearly deal with renouncing the job of executor and with gifts that fail. They do not set out a step-by-step process for refusing a gift. This article explains what is clear, what is uncertain, and why it is worth getting advice before you sign or say anything.

This article covers the law of British Columbia.

Renouncing as executor is not the same as refusing a gift

People often mix up two different things. A person named as executor can renounce that appointment. Unless the court orders otherwise, the estate is then administered as if they had never been appointed.

That rule covers the executor's role only. It does not tell you how to refuse a gift you are left as a beneficiary. If you are both an executor and a beneficiary, renouncing the executorship does not on its own decide what happens to your gift, so the two questions should be kept separate.

Who receives a gift that does not take effect

WESA deals with gifts that cannot take effect for any reason, including because the beneficiary died before the will-maker. Subject to a contrary intention in the will, the gift goes first to any alternative beneficiary named in the will.

If there is no alternative beneficiary, the next step depends on who the failed beneficiary was. Where that person was the will-maker's sibling or descendant, the gift goes to that beneficiary's descendants, worked out at the will-maker's death. Otherwise, it goes to the surviving residuary beneficiaries named in the will, in proportion to their interests.

Whether a gift you deliberately refuse is treated as one that cannot take effect is a question of how the statute is read. Do not assume it follows the same path. A lawyer can confirm how it applies to your will before you act.

If the will names no one to take your place, the result could differ from what you want. For example, if a refused gift were treated as failing, there was no alternative beneficiary, and you were the will-maker's sibling or descendant, the gift would go to your descendants. In other cases it would go to the surviving residuary beneficiaries. Either way, it may not go to the person you had in mind.

Common reasons people want to refuse, and what to check

• Tax: most gifts and inheritances are amounts that individuals do not have to report as income on their tax return. How refusing a gift would be treated for tax depends on your situation, so ask an accountant before you act.
• Creditors: a beneficiary who received estate property may have to give it up to an unpaid creditor. Refusing a gift to keep it from your own creditors raises separate legal questions, so get advice before trying it.
• Debts of the estate: if the estate cannot pay all its debts and gifts, WESA sets an order in which property is reduced, and specific legacies are reduced later than general legacies and the residue.
• Mortgaged or financed property: a beneficiary left property with a purchase money security interest is primarily liable for that secured debt.
• Family reasons: you may want to pass the benefit to a sibling or child. Whether a refusal could send the gift to a particular person depends on the will and your situation, so it is worth confirming with a lawyer.

If your concern is the debt that comes with a particular asset, it may be worth asking whether you can accept the gift and sell the asset instead. A lawyer or accountant can compare the options.

Situations that can change the answer

The separated spouse rule shows a situation where a gift fails automatically and no one has to refuse it. If you wonder whether you count as a spouse at all, common-law partners are spouses only if they lived together for at least 2 years.

What to do next

• Do not accept money or property from the estate until you have decided, since accepting may affect your options.
• Get a copy of the will and read who is named as alternative or residuary beneficiary.
• Write down why you want to refuse: tax, creditors, family or something else.
• Ask an accountant how the estate and you would be taxed in each case.
• Speak to a lawyer about whether a refusal can be done, how it would be recorded, and who would receive the gift.
• Tell the executor of your decision in writing only after you have received that advice.

Timing matters. The personal representative generally cannot distribute the estate within 210 days after the grant is issued, unless the court orders it or the required consents are given. That gives some time to get advice, but do not rely on delay.

Frequently asked questions