Internal Revenue Code (“IRC”) Section 2518 requires that a “qualified disclaimer” be made within nine months of the transfer creating the interest being disclaimed, that the disclaimer be in writing, the disclaimant has not accepted any of the benefits of the disclaimed interest, and the interest passes without any direction on the part of the person making the disclaimer. If these conditions are satisfied, the disclaimant is treated as having never received the interest. The property interest will pass to whoever would have received the assets had the disclaimant not been alive as specified in the governing instrument or by operation of law, and will not be considered as a gift or transfer by the disclaimant.
If utilized properly, the qualified disclaimer is perhaps one of the only techniques that allow a decedent’s estate plan to be analyzed retrospectively so that necessary adjustments may be made based upon the current circumstances of the estate’s beneficiaries. Ultimately, qualified disclaimers can create flexibility in the administration of an individual’s estate plan.
Maximizing the Use of the
Applicable Exclusion Amount
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