Houston Estate Planning and Elder Law Attorney Blog
Texas law allows a person who stands to receive property at someone’s death to refuse it, whether the property would pass under a will, without a will, or through a beneficiary designation. The refusal has to satisfy two separate bodies of law at once. Texas property law decides whether the refusal works. Federal tax law decides whether the heir is treated as having made a gift, and only the federal rules carry a deadline.
A person may disclaim an inheritance in Texas under Chapter 240 of the Texas Property Code, which Estates Code § 122.002 adopts for property passing at death. For federal estate and gift tax purposes, the refusal must also be a qualified disclaimer under 26 U.S.C. § 2518, made in writing, received within nine months, and made before the heir accepts any benefit from the property. McCulloch & Miller works through these decisions with families in Dallas and across Texas as part of its probate practice, often in the first weeks after a death, when the clock is already running.
What a Disclaimer Does Under Texas Law
A disclaimer is a written refusal to accept property, or an interest in property, that would otherwise pass to the person making it.
Texas treats the refusal as though it happened at the moment of death. Under Property Code § 240.051(b), a disclaimer of an interest passing at death takes effect as of the time of death and relates back for all purposes. Unless the will or other instrument says where disclaimed property goes, it passes as if the person disclaiming had died immediately before that time.
That usually sends the property down a generation. Under § 240.0511(a), where the disclaimant’s descendants would share by representation, the disclaimed interest passes only to the disclaimant’s descendants who survive the decedent. A daughter who disclaims her share of her father’s estate typically moves it to her own children, not to her siblings.
The Nine-Month Deadline Comes From Federal Law
Chapter 240 sets no deadline of its own. A late disclaimer can be perfectly valid in Texas and still fail the federal test, which is where the real consequences sit. Under 26 U.S.C. § 2518(b), a qualified disclaimer must meet four conditions:
- In writing: the refusal is irrevocable, unqualified, and written.
- Received in time: it reaches the transferor, the legal representative, or the holder of legal title within nine months after the later of the transfer or the disclaimant’s 21st birthday.
- No acceptance: the person has not accepted the interest or any of its benefits.
- No direction: the property passes without any direction from the person disclaiming, to the decedent’s spouse or to someone else.
A disclaimer that meets all four is treated for estate and gift tax purposes as if the interest had never been transferred to the heir. One that misses the window loses that treatment, and the property moving on to the next person may be taxed as a gift from the heir.
For a Dallas County estate with an executor serving, § 240.102 requires delivery to that executor. Where no personal representative is serving, the disclaimer is filed in the official public records of the county where the decedent lived or any county where the decedent owned real property.
Questions like this one are cheaper to answer before signing than after. Call McCulloch & Miller at (713) 333-8900.
Accepting Any Benefit Ends the Option
Both bodies of law bar a disclaimer once the heir has accepted the property. Under Property Code § 240.151(b), a disclaimer is barred if, before it takes effect, the disclaimant takes possession of the interest, exercises control over it, or voluntarily assigns, pledges, sells, or contracts to transfer it.
Small acts can count. Cashing a dividend check, moving into an inherited house, or borrowing against inherited stock can each be treated as acceptance. There is one useful exception. Under § 240.151(c), handling estate property as executor is not acceptance in an individual capacity for Texas purposes, so an executor can manage the estate and still disclaim a personal share.
Where a Disclaimer Protects Against Creditors, and Where It Does Not
Section 240.051(b)(2) provides that a disclaimed interest is not subject to the claims of any creditor of the disclaimant. That protection has two limits families need to know before relying on it.
The first is child support. Section 240.151(g) bars a disclaimer by a child support obligor as to property that could satisfy an obligation that has been administratively determined or reduced to judgment, and every individual disclaimer must state under penalty of perjury whether that bar applies.
The second is Medicaid. The Texas HHS Medicaid eligibility handbook, at section I-1210, lists “waiving the right to receive an inheritance” as an action that counts as a transfer of assets. An heir in a nursing facility, or receiving Medicaid waiver services, who disclaims an inheritance may face a penalty period, which is why disclaimer decisions for older heirs belong in the same conversation as Medicaid crisis planning.
Questions Texas Heirs Ask About Disclaimers
Can an Heir Choose Who Receives a Disclaimed Inheritance?
No. A qualified disclaimer must let the property pass without any direction from the heir, and Texas law sends it where the will directs or as if the heir had died first. An heir who wants to pick the recipient can accept and assign the property instead, but Estates Code § 122.205 treats that assignment as a gift.
Can Part of an Inheritance Be Disclaimed?
Yes. Property Code § 240.009(b) allows a partial disclaimer expressed as a fraction, percentage, dollar amount, or other portion, and federal law recognizes a disclaimer of an undivided portion of an interest.
Does a Disclaimer Have to Be Filed in Court?
Not always. When an executor or administrator is serving, the disclaimer is delivered to that person. Filing in the county’s official public records is required only when no personal representative is serving.
Deciding Before the Nine Months Run
The window opens at the death, and most of it can pass while a family is still locating accounts. An heir weighing a disclaimer does well to decide early and to avoid touching the property until the decision is made. The firm handles disclaimers within its broader work guiding executors through the Texas probate process. To go through your situation with the firm, call (713) 333-8900 or send a message through the contact page. Flat fees are available for much of this work.