What Is A Disclaimer Trust?

A Disclaimer Trust is a Trust established in a Will or Revocable Trust which provides that a Disclaimer Trust is funded only if a designated person (usually the surviving spouse of a Decedent) files a proper Disclaimer within nine (9) months of the Decedent’s death. The terms of the Disclaimer Trust are similar to those contained in a Credit Shelter Trust.

Disclaimer Trusts became popular after the 2001 Tax Act was passed because of the uncertainty created by the temporary nature of the Federal Estate Tax Law. There are several important variables that come into play in estate planning. The principal variables important at the time of the first spouse’s death include: the value of the estate, the age of the surviving spouse, the health of the surviving spouse and the status of the federal and state estate tax laws. The theory behind the Disclaimer Trust technique is that all of the above variables can be diagnosed at the time of the first spouse’s death, and the surviving spouse can make an informed decision at that time whether or not to fund the Disclaimer Trust. The Law Office of David K. Whitlock provides expert tax advice to surviving spouses who must make this important decision.

The actual Disclaimer must meet certain legal and filing requirements and the person disclaiming must not accept any benefits from the assets disclaimed before filing the Disclaimer. It is important to consult with an experienced estate planning attorney soon after the death of a loved who has used the Disclaimer Trust technique as part of his or her Estate Plan to see if a Disclaimer is advisable.