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What Is a Disclaimer Trust, and How Is It Used In Estate Planning?


The right estate planning is essential in order to ensure that your loved ones are taken care of in the event of your death. To this end, a disclaimer trust is sometimes helpful if a family is concerned that the estate tax or asset values may change after making a will which may ultimately leave your family in an estate tax bind.

A disclaimer trust allows for the surviving spouse to place assets in a trust by disclaiming (give up) ownership of a portion of the estate. Thus if, for example, it is too expensive to pay estate taxes on inheritance at the time of the death of a surviving spouse, a given asset can either go to another family member instead or be placed in the trust. Who the asset passes onto, however, stays within control of the decedent throughout the process.

In brief, disclaimer trusts can often help minimize overall estate taxes and operate as a kind of “credit shelter trust” (with more flexibility and choice) by relying upon the estate tax exclusion of the decedent.

Qualities Specific to Disclaimer Trusts

Disclaimers like these involve the individual drafting the will placing a significant amount of faith in their beneficiaries to make sound financial decisions once they are gone. In addition, keep in mind that they:

  • Are irrevocable and unqualified;
  • Must be put forth in writing within nine months after the individual who drafted the will dies;
  • Do not allow any beneficiary who is drawing a benefit from the asset to disclaim the asset;
  • Are permanent once an asset is disclaimed (in other words, the decision to undo cannot be undone); and
  • Can sometimes be difficult in the context of a more complicated, “blended” family structure that involves divorce, remarriage, etc.

Disclaimer trusts are an opportunity for those who are planning an estate to deal with a period of uncertainty as to what amount will be tax free in terms of federal estate taxes (and thus what should pass into a trust). Couples who do not know which spouse will die first, the value of their assets upon the death of the first to die, and what will happen in terms of estate taxes often find them appealing.

Estate Planning & Wills Attorneys Serving Sarasota & Surrounding Areas

Disclaimer trusts require more supervision from experienced attorneys who can help you ensure that you are making rational decisions that won’t result in having to pay more taxes. Attorneys that specifically practice in wills & probate have knowledge of tax law, and can thus ensure that this is the right option for you and your family given your particular circumstances before you dive in headfirst.

Estate planning should be done with forethought and experience, but it doesn’t need to be expensive. At Suncoast Civil Law, we will work with you to create an estate plan that meets your specific needs. Our experienced Florida wills attorneys have helped countless clients plan for the future. Contact us today to find out how we can help you.


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