A Qualified Disclaimer occurs when a beneficiary of a will or trust refuses to accept the property or assets bequeathed to him or her. When the beneficiary submits a qualified disclaimer, the IRS allows the property to move to the next person in line according to the will or trust. For tax purposes, the original beneficiary never receives any interest in the property and therefore may not incur tax consequences (although disclaiming certain trust assets may still be taxable under federal law).
There are several situations where a qualified disclaimer would be beneficial:
- The beneficiary may have outstanding debts that would result in the assets going straight to creditors. He or she can preserve those for other family members by submitting the qualified disclaimer.
- The beneficiary may have plenty of assets and simply prefer children or grandchildren to receive the inheritance instead.
For a Qualified Disclaimer to be valid it must meet the following requirements:
- It must be in writing
- It must be made within 9 months of the date of death of the decedent
- The disclaimant cannot receive any benefits from the assets
Offering flexibility whenever possible in estate planning helps achieve maximum tax advantages. Qualified disclaimers are one way to offer this type of flexibility. To learn more, contact an experienced estate planning attorney with Stouffer Legal at 443-470-3599 in the Greater Baltimore area.