Is it possible to refuse inherited property in order to reduce taxes?

Yes. You can make use of a formal disclaimer to refuse all or part of the property being passed on to you by a will, intestacy laws (state laws governing how property is distributed if someone dies without a will),or other operation of law. The property is then passed to the next beneficiary in line.

By allowing property to pass directly from the decedent to the next beneficiary, it could possibly save thousands in estate taxes. The wise use of the disclaimer and the condition for a disclaimer in a will permits the shifting of assets and income to maximize the estate tax marital deduction, unified credit rules and lower income tax brackets.

Disclaimers may also come in handy to provide for financial contingencies. For example, if someone else in the family needs funds, you can disclaim an interest that would then pass to directly to them.