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Disclaimers

Disclaimers. Reasons to Disclaim. 1. Onerous Burdens. Reasons to Disclaim. 1. Onerous Burdens 2. Tax Savings. Possible Reasons to Disclaim. 1. Onerous Burdens 2. Tax Savings 3. Avoid creditors, except IRS Child support As of 1/1/14 EC § 122.107.

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Disclaimers

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  1. Disclaimers

  2. Reasons to Disclaim • 1. Onerous Burdens

  3. Reasons to Disclaim • 1. Onerous Burdens • 2. Tax Savings

  4. Possible Reasons to Disclaim • 1. Onerous Burdens • 2. Tax Savings • 3. Avoid creditors, except • IRS • Child support • As of 1/1/14 • EC § 122.107

  5. RequirementsPC § 37A; EC § 122.107 • 1. Disclaimer Document • a. Written, • b. Acknowledged, and • c. Statement whetherdisclaimant owes back child support [as of 1/1/14]

  6. RequirementsPC § 37A; EC § 122.055 • 2. Proper Filing • a. When = 9 months after decedent’s death

  7. RequirementsPC § 37A; EC § 122.052 • 2. Proper Filing • a. When = 9 months after decedent’s death • b. Where = in court where probate proceedings pending

  8. RequirementsPC § 37A; EC § 122.056 • 3. Notice to personal representative by • a. Personal service, or • b. Registered or certified mail.

  9. Basic Disclaimer Principles • 1. Wills, life insurance policies, etc. may provide disclaimer methods and designate who receives disclaimed property.

  10. Basic Disclaimer Principles • 2. Irrevocable

  11. Basic Disclaimer Principles • 3. Partial disclaimers (“cherry-picking”) allowed.

  12. Basic Disclaimer Principles • 4. Acceptance precludes later disclaimer.

  13. Basic Disclaimer Principles • 5. Disclaimed property passes as if disclaimant predeceased decedent.Disclaimant cannot control where property goes.Treated as legally dead although biologically alive vis-à-vis the disclaimed property.

  14. Welder v. Hitchcock – p. 51

  15. Situation • Husband died intestate survived by his wife and their four children. • All children want wife/mother to receive all husband/dad’s property. • They all execute valid disclaimers. • Result??

  16. Basic Disclaimer Principles • 6. Lack of understanding of effect of disclaimer (e.g., who receives the disclaimed property) ≠ ground for undoing

  17. Basic Disclaimer Principles • 7. Lack of understanding of what property is being disclaimed = ground for undoing

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