Using Disclaimers After the New Regulations

Englebrecht, Ted D.; Witt, Kayoko
May 1999
Journal of Financial Planning;May99, Vol. 12 Issue 5, p79
Academic Journal
This article presents information on disclaimers. A qualified disclaimer is an irrevocable and unqualified refusal to accept the ownership of an interest in property. For federal estate, gift and generation-skipping tax purposes, the disclaimed interest in property is treated as if it had never been transferred to the person who made the qualified disclaimer. At first glance, the requirements of a qualified disclaimer appear straight-forward. However, tax and financial planning consultants are finding that disclaimers are not necessarily a clear and unencumbered area. Taxpayers have encountered significantly divergent interpretations by the courts on several attributes of disclaimers. The reason a person makes a disclaimer may or may not be tax related. Some may refuse to accept a gift simply because they do not want it. Others may make a disclaimer for the benefit of someone else. For example, a child of a decedent may make a disclaimer so that his or her surviving parent may receive an interest in the property disclaimed. Others use a disclaimer for tax purposes because a disclaimer can be an effective financial planning tool. Disclaimers can be valuable in financial and estate planning. The most common use may be in adjusting marital deductions. Although a decedent cannot change or correct his or her own will, survivors may do so by using the disclaimer technique.


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