Disclaimer Trust

[bfrank12]

Hello,

Does anyone have any experience with disclaimer trust?

"A Disclaimer Trust allows a surviving spouse to take advantage of estate tax exclusions at the time of their spouse’s death. In the event that tax laws or circumstances would make putting the asset in trust favorable, the surviving spouse can disclaim the asset passing it into a trust. If it is not necessary, the trust can be avoided. This Disclaimer Trust can be drafted to take advantage of certain tax options available to a surviving spouse. The decision is left up to the surviving spouse, and he or she can appoint him or herself trustee of any trust created under such a plan. This allows a married couple to maintain control over their finances for as long as one of them is alive."
In an estate context, a Disclaimer means declining to take an inheritance one is legally entitled to. Disclaimers are often a means of correcting mistitled assets. When people don’t realize how the ownership of their assets impacts their estate plan, family members can disclaim assets that would otherwise pass to them. This can either move assets to a contingent beneficiary or move them back into an estate to be handled through the probate process."

The scenario to use would be if the surviving spouses' asset exceeds estate exemption. The surviving spouse then disclaim and move it to contingent beneficiary.

 

[Taxman59]

We used it with the family I w**ked for. It is extremely flexible if done right. We used it to allow for a charitable bequest if the kids were well enough off to defer receipt of wealth until it could go to grandkids.

 

[Stormy Kromer]

This is lawyer territory. A specialized estate lawyer.

DW's parents had Disclaimer Trusts and it worked well when they passed. Our State has an estate tax with a much lower threshold that the Federal has. I don't know the mechanics of it, but their Disclaimer Trust allowed them to place the first spouse to die assets in a trust for as long as the surviving spouse was alive and still benefit from it. The surviving spouse never really owns it, just benefits from it. When the second spouse passes the Trust assets are not part of their estate, so each spouse gets to take advantage of the estate tax limit instead of combined assets of the total estate they would have had if the surviving spouse had inherited the first spouse's assets and had one big pile.

Any attorney's can sure clear this up, this is just how SGOTI's experience with a Disclaimer Trust. I hear that it gives the surviving spouse more options. It worked well for DW's family. They owned farmland that would have put the surviving spouse over the MN estate tax limit had they owned it all.