Disclaimer wills are a unique type of will that may offer some tax advantages to the surviving spouse of the testator. Basically the way this works is that one spouse will transfer 100% of their assets to their spouse in their will. The surviving spouse will then “disclaim” any property or assets that they don’t wish to inherit. This results in a more efficient distribution of the property, as well as significant estate tax reductions.
Thus, a disclaimer will is usually touted as being a “flexible” method for distributing property to a spouse and other survivors. Oftentimes, the testator (creator of the will) doesn’t know exactly how their property should be distributed, let’s say, 5 or 10 years down the line. Using a disclaimer will puts some of the responsibility in to the hands of the surviving spouse, who is often a more trustworthy representative of the person than most other people.
The disclaimers are used when a person does not want to inherit or accept a gift that was given to them through a will. The reason many people use disclaimers is because they do not want their estate to end up paying additional federal taxes when they die because of the increase in their estate’s value. By disclaiming the gift or inheritance, they shift the inheritances to another person.
In order to be valid, a disclaimer will must be in writing, be an irrevocable and clear indication of their refusal to accept an interest in the property, and must be delivered to the executor within nine months from the date of death. The person signing the disclaimer must not have accepted any part of the asset, or any benefit from the asset, such as rent, dividends or interest, and the person signing the disclaimer cannot direct the interest in the property to another recipient.
In most cases the surviving spouse has nine months to complete the disclaiming process. During this time, the surviving spouse must go through their deceased spouses’ estate and indicate which items they would prefer to inherit, and which items might be distributed to other people through succession and inheritance laws.
Obviously, this can be a complex and tedious process, but most of the time it’s worth it, since the surviving spouse might not actually need to assume ownership of every single item in the estate. This gives the advantage of hindsight, since the estate gets a “once-over” after the person has become deceased. Also, some provisions in the person’s ill may have become outdated over time. A disclaimer will can help the surviving spouse deal with any unanticipated changes that may have happened over time.
The remaining property after the disclaimers are made is usually placed in a trust, to be used later or to be administered for the benefit of a named person (such as a child of the couple or a close relative). When the surviving spouse dies, their property may then be bequeathed to the children of the couple according to controlling state laws.
Disclaimer wills aren’t for everyone. One major concern is that the surviving spouse may not be in the best position to manage an entire estate, physically and mentally speaking (especially if the couple is already well advanced in years). For example, if the surviving spouse becomes incapacitated or no longer has the mental capacity to make sound legal decisions, something needs to be done in order for the estate to be distributed correctly.
Therefore it’s usually necessary to appoint a back-up or alternate representative to manage the estate if something should happen to the surviving spouse. If no suitable alternative is found, the property may need to be distributed through the state probate process, which can often yield inefficient results.
Disclaimer wills work most effectively if they are drafted, reviewed, and edited with the help of an attorney. A qualified estate planning lawyer should be consulted if you and your spouse need to learn more about the ins and outs of disclaimer wills. Also, in the event of a will dispute or a property contest, you may need to hire a lawyer for representation in a court of law.
Last Modified: 03-31-2016 11:15 AM PDTLaw Library Disclaimer
We've helped more than 4 million clients find the right lawyer – for free. Present your case online in minutes. LegalMatch matches you to pre-screened lawyers in your city or county based on the specifics of your case. Within 24 hours experienced local lawyers review it and evaluate if you have a solid case. If so, attorneys respond with an offer to represent you that includes a full attorney profile with details on their fee structure, background, and ratings by other LegalMatch users so you can decide if they're the right lawyer for you.