Use Disclaimers as an Estate Planning Tool
25 Jan 2012 / By: Mark S. Eghrari / Category: Estate PlansFirst a definition: A disclaimer is a legal method of turning down a gift that was made to you. For estate planning purposes, disclaimers are a legal way to turn down either a gift or an inheritance.
For example, say your wife survives you. Among other bequests, you leave a sizable bank account to your wife. She is the primary beneficiary of the account, and your two children are the contingent beneficiaries. So far so good, but what if your wife doesn’t need the money in the bank account, and wants to avoid paying estate taxes? She can sign a legal document disclaiming the account; when she does, the account passes to your two children since they are the contingent beneficiaries.
The alternative is for your wife to accept the account and then give it to your children. The problem with that approach is that the funds are counted in her estate, and gift taxes may be due as well.
Disclaimers can be a great estate planning tool under specific circumstances. Contact us for more information on whether a disclaimer is the right way to ensure your wishes are carried out.
Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.
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Tags: beneficiaries, bequest, disclaimer, estate plan
