Qualified Disclaimer
Candlefocus EditorIn brief, a qualified disclaimer must meet four essential requirements. These requirements, which must all be met in writing and consistent with federal tax law, are as follows:
Firstly, a disclaimer must be timely. A qualified disclaimer must be signed and delivered to a "qualified recipient" within 9 months of the transfer of the property or within 9 months of the transferor's death, whichever occurs later. It is considered timely if it is signed and delivered within the time limit.
Secondly, the disclaimer must be irrevocable and unconditional. This means that the beneficiary must give up all rights to the property being disclaimed, and cannot take any kind of benefit from it. In addition, the disclaimer cannot contain any sort of negotiating or condition of acceptance by the disclaimant or other parties.
Thirdly, the disclaimer must state specifically and in writing exactly how much of the property is being disclaimed. A qualified disclaimer cannot be used to disclaim a percentage of the property, only the exact dollar amount or description must be provided.
Finally, the person disclaiming the property must not have made any kind of acceptance or have taken any benefit from the property that they are disclaiming. This means that they cannot have taken any possession, control, or consulted or contracted with regard to the property that they are disclaiming. If a beneficiary has taken possession of or used the property in any way, the disclaimer will not qualify.
A qualified disclaimer is a useful tool to transfer assets from one person to another without having to pay income tax. However, for the disclaimer to be considered valid, it must meet four criteria outlined by the United States tax code. The person disclaiming the property must sign and submit the disclaimer within 9 months of the transfer or their transferor’s death, the disclaimer must be irrevocable and unconditional, it must specify exactly how much of the property is being disclaimed, and the person disclaiming the property cannot have taken any possession of the property or have accepted any benefit from it.