Cannon Trust School Level I Practice Exam

A qualified disclaimer lets a beneficiary renounce an interest so that it passes to the designated alternate beneficiaries for federal transfer tax purposes, but it must meet several strict rules. It has to be made within nine months of the decedent’s death, be in writing and irrevocable, and the disclaimed interest cannot have been accepted or enjoyed by the person making the disclaimer. It also must be delivered to the fiduciary handling the estate or trust (not filed with a court) and must cover the property interest as it would pass under the instrument, without any improper conditioning or consideration. If any of those requirements aren’t met, the disclaimer won’t be recognized for transfer tax purposes. In this situation, Fred cannot make a valid qualified disclaimer to redirect distributions because he has run afoul of one or more of those requirements, so no tax-qualified disclaimer would be recognized. If the requirements were all satisfied—timely, properly executed, no prior acceptance, and properly delivered—the disclaimer could be used to redirect the disclaimed share to the intended alternate beneficiaries.