A disclaimer will is a type of will that can offer tax benefits to the surviving spouse of a testator (the person who creates the will).
With a disclaimer will, one spouse transfers all of their assets to their surviving spouse in the will. The surviving spouse then can “disclaim” (i.e., refuse) any property or assets they do not want to inherit.
This can result in a more efficient distribution of property and can lead to significant estate tax reductions. A disclaimer will is praised for its flexibility, especially when distributing property to a surviving spouse and other beneficiaries. Sometimes, a testator may not be entirely sure how their property should be distributed in the future, perhaps 5 to 10 years later.
By creating a disclaimer will, some of this decision-making responsibility can be shifted to the surviving spouse, who is often the most trustworthy representative of the deceased person. Ultimately, a disclaimer will can help ensure that property is distributed in the most tax-efficient and fair manner possible.
Why Are Disclaimers Used?
A disclaimer is useful for people who do not want to accept a gift or inheritance left to them in a will. The primary reason why many people use disclaimers is to avoid paying additional federal taxes when they die. By disclaiming the gift or inheritance that would increase the value of their estate, they can shift the tax liability to the next or alternate person named in the will.
What Are Some Requirements of a Disclaimer Will?
To ensure that a disclaimer will is valid and legally enforceable, it must meet certain requirements. The document must be in writing and must clearly indicate the person’s refusal to accept the property interest. It must be delivered to the executor or administrator of the testator’s estate within nine months from the date of their death.
Furthermore, the person who signs the disclaimer cannot accept any part of the asset or benefits, such as rent, dividends, or interest. This requirement is to prevent any potential abuse of the disclaimer process. If the disclaimant has already benefited from the asset, such as by receiving rent, dividends, or interest, it could be seen as unfair for them to disclose it later and shift the tax liability to someone else.
By prohibiting the disclaimant from accepting any benefits from the asset before disclaiming it, the law ensures that the disclaimer process is fair and transparent for all parties involved.
Lastly, the person signing the disclaimer cannot direct the interest in the property to be given to another recipient. They must simply refuse it and allow the executor or the testator’s legal representatives to handle the rest of the process. This requirement ensures that the distribution of the assets is handled according to the testator’s wishes, as stated in their will or estate plan. If a person were allowed to direct the interest in the property to be given to another recipient, it could potentially undermine the testator’s intentions and disrupt the orderly administration of their estate.
By refusing the interest in the property outright and allowing the executor or the testator’s legal representatives to handle the distribution, all parties’ interests are protected, and the testator’s wishes are more likely to be fulfilled.
How Much Time Does a Surviving Spouse Have to Make a Disclaimer?
The testator’s surviving spouse usually has nine months to complete the disclaiming process.
During this period, the surviving spouse must go through their deceased spouses’ estate, identifying which items they would prefer to inherit and which should be distributed to others through the proper legal channels.
After the surviving spouse has identified the items they would like to inherit and those that should be distributed to other beneficiaries, they must file a written disclaimer with the executor or administrator of the deceased spouse’s estate within nine months. The disclaimer must be in writing and clearly, state which property or assets the surviving spouse refuses to accept.
The surviving spouse cannot have accepted any part of the assets or benefits before filing the disclaimer. Additionally, the surviving spouse cannot direct the interest in the property to be given to another recipient.
Once the disclaimer is filed, the property or assets that are disclaimed will be distributed according to the instructions provided in the deceased spouse’s will or state law.
Are There Any Drawbacks to Disclaimer Wills?
Disclaimer wills are not suited for everyone or every situation.
One major concern is that the surviving spouse may not be in the best position to manage an entire estate, both physically and mentally, especially if the couple is already advanced. This concern arises because managing an estate can be complex and time-consuming and may require great attention to detail and legal knowledge.
If the surviving spouse is not up to the task, it may be necessary to appoint a backup or alternate representative to manage the estate on their behalf. This can ensure that the estate is managed properly and that the deceased person’s wishes are carried out per their will. Without a backup representative, the estate distribution may be delayed or disrupted, potentially leading to disputes or other legal issues.
Another concern with disclaimer wills is that they may not be the best option for people with a complex or large estate. In such cases, it may be more appropriate to use other estate planning tools, such as trusts or joint ownership arrangements, to ensure that the estate is distributed according to the individual’s wishes and in the most tax-efficient manner possible.
It is also necessary to appoint a backup or alternate representative to manage the estate if something should happen to the surviving spouse. Appointing a backup or alternate representative is important because if the surviving spouse becomes incapacitated or unable to manage the estate due to any reason, then the backup representative can step in and manage the estate on their behalf.
Without a backup representative, the estate may be left unmanaged, leading to potential legal and financial issues for the surviving family members and beneficiaries.
Do I Need to Hire a Lawyer for Help With Drafting a Disclaimer Will?
Disclaimer wills are most effective when drafted, reviewed, and edited with the help of an attorney. If you and your spouse need to or are interested in learning more about the ins and outs of disclaimer wills, you should consider consulting a qualified lawyer.
LegalMatch can help you find a qualified will attorney with experience drafting disclaimer wills. You can submit your case details on the LegalMatch website, and attorneys in your area who handle estate planning will review your case and respond to you directly.
From there, you can compare their qualifications, experience, and fees to determine which attorney best fits your needs. With LegalMatch, you can have peace of mind knowing that you are working with a qualified attorney who can guide you through creating a disclaimer will.
Use LegalMatch to find the right lawyer today.