What is a disclaimer?

A disclaimer is a refusal to accept property that one would otherwise receive by gift or inheritance. These days the disclaimer is receiving much more attention from estate planners for its usefulness in adjusting estate plans after death when needed.

Disclaimers are a way of changing the distribution from a Will if there is a tax benefit or other reason to do so. For example, Grandpa leaves his estate to his Daughter who is already wealthy. Daughter disclaims the inheritance and allows it to go instead to her children who need the money to pay college tuitions for their children. 

In order to disclaim property, the person disclaiming must satisfy several requirements. There must be a written document describing the property to be refused and signed by the person disclaiming. The written document must be delivered to the Executor and filed in the Probate Court within 9 months of the date of death. The person disclaiming must not have received any benefits from the property they are disclaiming. In order to preserve the right to disclaim, the person entitled to an inheritance should consult with an estate attorney before doing anything with the estate assets. The estate attorney will help determine whether the disclaimer is needed, and if it is needed, will prepare the written document and make sure that all the legal requirements are met.

Disclaimers are useful in this time of uncertainty about the federal estate tax. The disclaimer can be used to correct planning that relied on tax credits and exemptions that do not exist in 2010. The disclaimer can be built-in to documents designed now as a way of giving flexibility and allowing for future adjustments to be made to obtain the most beneficial outcomes.

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