Updated 23 October 2026
Administration of Estates - Potential Problem #18: Heir Refused to Claim Inheritance
A beneficiary can generally refuse an inheritance in NSW. The legal term is a disclaimer. However, a valid refusal requires more than leaving the executor’s emails unanswered, and it does not let the beneficiary choose a replacement recipient. The will and applicable succession law determine what happens to the rejected gift.
Before refusing anything, establish exactly what you are entitled to, whether you have already accepted it and who would benefit if you disclaim. Executors need the same clarity before distributing the affected assets. An inheritance that is formally rejected raises different questions from one that remains unclaimed because the beneficiary cannot be located.
1. Understand what a disclaimer does
A disclaimer rejects an entitlement. It differs from accepting an inheritance and then giving it away, assigning the entitlement to someone else, or agreeing with other beneficiaries to change the distribution. Those alternatives can produce different legal, tax and social security outcomes.
The right to refuse can apply to gifts under a will and entitlements under intestacy. In Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd [2017] NSWCA 184, the Court of Appeal discussed a residuary beneficiary’s ability to disclaim before probate or during administration. The judgment also distinguished an actual entitlement from the mere expectation of inheriting while the will-maker is alive.
A statement made during the will-maker’s lifetime should therefore not be treated as a completed disclaimer of a future estate gift. If the will-maker wants a different distribution, the appropriate step is to review their will while they can give valid instructions.
2. Obtain advice before accepting or dealing with the gift
An effective disclaimer generally requires rejection of the whole relevant gift within a reasonable time after learning of it, without accepting its benefit. The ATO’s discussion of disclaimer principles identifies these requirements. Requesting payment, using inherited funds or otherwise dealing with an entitlement may undermine a later attempt to disclaim.
Where a will makes genuinely separate gifts, it may be possible to refuse one and accept another. However, a share of the residuary estate is generally one gift even though it contains several assets. Do not assume you can retain the cash component while disclaiming an unwanted property within the same gift.
There is no universal requirement for a particular court form or prior court approval. A disclaimer may be communicated in writing, orally or through conduct, but a carefully prepared written document provides much clearer evidence. The Law Society Journal’s guidance explains the practical risks.
A solicitor should identify the entitlement, record an informed and unequivocal decision, and ensure the executor receives it. Do not assume the decision can later be reversed, especially after others have acted on it. Where a beneficiary is a child or lacks capacity, a relative cannot simply sign away their inheritance; authority and any necessary court involvement require separate advice.
3. Check who receives the rejected inheritance
Read the whole will, including substitute gifts, the residuary clause and any ultimate beneficiary provision. A clause dealing only with a beneficiary dying before the will-maker may not clearly address a beneficiary who survives but refuses the gift. The wording and applicable rules must be considered together.
Under the Succession Act 2006, an ineffective gift can fall into the residue, and a failed fractional share of the whole estate or residue may pass proportionately to the other shares. These rules are subject to a contrary intention in the will. If the will does not effectively dispose of the affected property, partial intestacy may result.
For an intestate entitlement, section 139 treats a person who disclaims as having predeceased the deceased for distribution purposes. Their descendants may then qualify under the relevant intestacy rules. This does not mean that every disclaimer under a will automatically sends the inheritance to the disclaiming beneficiary’s children or siblings.
The executor should establish the resulting beneficiaries and shares before making a payment. A family’s preferred outcome, however understandable, cannot replace the legal entitlement without an effective and properly authorised arrangement.
4. A refusal cannot nominate a charity
Illustration only: a will leaves three adult children equal shares of the residue. Elena says she wants nothing and would prefer her share to go to an animal charity. Her preference does not itself authorise the executor to pay the charity. A valid disclaimer requires the executor to determine the destination under the will and applicable law.
If Elena wants to control the destination, she needs advice about a different arrangement, such as accepting and donating the gift or documenting an appropriate variation with all necessary parties. Neither option should be assumed to have the same tax or Centrelink treatment as a disclaimer. This is a hypothetical example, not a client matter or court decision.
5. A genuine NSW case about an unclaimed entitlement
In Application of the NSW Trustee and Guardian; Estate of SGB [2015] NSWSC 398, the deceased died without a will, spouse or children. Her mother received half the estate. Her father was later located, but he lacked capacity and his wife held his power of attorney.
The Court initially declined to approve distribution of the remaining balance merely because correspondence had gone unanswered. Further inquiries produced a telephone statement from the father’s attorney that his share was not wanted. The Court then gave conditional judicial advice allowing distribution to the mother after formal notice and an opportunity to seek different orders, or earlier written confirmation of the disclaimer.
The case shows why evidence, authority and procedural protection matter. It does not establish that silence alone permits an executor to redistribute an inheritance.
6. Consider Centrelink bankruptcy and tax before signing
Centrelink: refusing an inheritance does not necessarily preserve a pension or other means-tested payment. The Department of Social Services guide explains that deprivation rules can apply when a beneficiary waives an estate interest or redirects it without adequate consideration. The person may still be assessed as having disposed of an asset, despite receiving no money. Check the consequences with Services Australia and an appropriately qualified adviser before signing.
Bankruptcy: an inheritance entitlement arising before or during bankruptcy may be claimable by the bankruptcy trustee. AFSA’s guidance requires notification within 14 days of becoming aware of the entitlement. Do not assume that refusing payment, delaying administration or asking a sibling to receive it will defeat the trustee’s rights.
Tax and duty: Australia has no general inheritance tax, but transactions involving estate assets can have other tax consequences. A transfer or family arrangement affecting NSW land may alter eligibility for a deceased-estate duty concession. Overseas connections can introduce additional rules. Obtain advice on the actual arrangement rather than relying on the label ‘disclaimer’. Our estate-tax article explains the broader distinction between inheriting assets and tax arising from them.
7. Protect the estate when a beneficiary does not respond
Executors should preserve the affected assets, record contact attempts and seek clarification directly from the beneficiary or an appropriately authorised representative. Check identity, capacity and the precise gift involved. Avoid relying solely on another relative’s account of what the beneficiary supposedly wants, particularly where that relative would benefit from the refusal.
Missing beneficiaries, an uncertain disclaimer and a disagreement about who inherits require different responses. Depending on the circumstances, further searches, protected retention of funds or a court application may be appropriate. There is no general rule allowing the executor to distribute an unclaimed share after an informal deadline.
Section 63 of the Trustee Act 1925 allows judicial advice on administration and interpretation questions. Executors and administrators can seek this protection where necessary. A clear, properly advised disclaimer does not automatically require litigation.
When preparing a will, address what should happen if a beneficiary cannot or will not take a gift. Include suitable substitute and ultimate beneficiaries, and review the clauses as circumstances change. CM Lawyers can assist with wills and estate administration, including the effect of a proposed disclaimer. Contact our Marrickville team before signing a refusal or distributing an affected share.
This article provides general information. The effect of a disclaimer depends on the gift, the documents and the beneficiary’s circumstances.
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