True Leadership is Service
by Alan L. Olsen, CPA, MBA (tax)
Greenstein Rogoff Olsen & Co. LLP
There are a few rules that you should be aware of when making a qualified disclaimer.
If a person does not follow these requirements, the property in question will be considered a personal asset that he or she has given as a taxable gift to the next beneficiary in line.
According to the IRS, the person disclaiming the asset must meet the following requirements to use a disclaimer:
Make the disclaimer in writing
Disclaim the asset within nine months of the death of the assets’ original owner (in the case of a minor beneficiary wishing to disclaim, the disclaimer cannot take place until after the minor reaches the age of majority)
The person disclaiming cannot have benefited from the proceeds of the disclaimed property
The person disclaiming cannot have the assets indirectly pass to him or her
Keep in mind that the disclaimer is irrevocable; the person who disclaims the property can’t come back later, after a failed business or stock market slump, for example, and reclaim those assets.
The person disclaiming the assets does not get to choose who is next in line to receive the disclaimed property. Instead, the assets will pass to the contingent beneficiary as if the first beneficiary had died.
In the case of an intestate death, state law will determine the next beneficiary.