question.jpgIn Trusts and Estates

What is a disclaimer?

When someone dies intestate, the state intestacy statutes will dictate who is entitled to the deceased person’s property. However, just because these statutes say you are entitled to some property does not mean you have to accept it. You can renounce your right to inherit that property by making a disclaimer. Similarly, just because you are named as an heir in someone’s will does not mean you must take the will’s gift - you can disclaim it.

There are many reasons why you might want to disclaim property, such as to avoid the tax burdens and liability that come along with accepting the property or because you simply do not want the property. Each state has its own requirements as to what you specifically have to do in order to validly disclaim property, but generally: (i) your disclaimer must be written and signed by you; (ii) you must file your written disclaimer within a specified amount of time with the proper state authority (such as the probate court); (iii) you must give a copy of your written disclaimer to the person who is handling and administering the estate; (iv) your disclaimer must be total - you either disclaim all of the property you are entitled to, or take it all; and (v) you cannot condition your disclaimer on anything.

When someone disclaims property, for the purposes of determining who the property should then go to, the administrator will distribute it as if the intended heir (the person who disclaimed the property) had died before the person who originally owned the property.

Just as an heir can make a disclaimer to reject the inheritance from a will or under the intestacy statutes, a trust beneficiary can disclaim the equitable title given to him or her by the trust. In this situation, the potential beneficiary is saying that they do not want to hold the property’s equitable title, and will therefore not be entitled to the use or enjoyment of the trust property. Where a potential beneficiary makes such a disclaimer, the equitable title passes on as if the intended beneficiary had died before the trust was executed.