Financial & Estate Planning

Qualified disclaimers, as they’re known, have become an integral part of many estate plans. For example, Alan’s will might leave his assets to his wife Beth; if Beth predeceases Alan, then Alan’s assets go to their son William, under the terms of Alan’s will. At Alan’s death, Beth can consider all the circumstances (tax law, her other assets) and decide whether to disclaim.


If Beth formally disclaims her inheritance within nine months of Alan’s death, the assets will pass to William, as if Beth had predeceased Alan. There will be no taxable gift from Beth to William.

The same reasoning holds for IRAs and other retirement accounts. If Beth is the primary beneficiary of Alan’s IRA while William is the contingent beneficiary, Beth can disclaim within nine months of Alan’s death. Then William will become the IRA beneficiary.

Such disclaimers may be used to avoid piling up assets in one person’s taxable estate. IRA disclaimers also may move assets to a beneficiary with a longer life expectancy, for greater IRA tax deferral, although the generation-skipping transfer (GST) tax might have to be considered.