- posted 10 years ago
Assume there is a trust (either living trust becoming irrevocable
at testator's death, or testamentary trust) that while it lets
the surviving spouse have some sort of access to its assets, it
makes sure to deprive the spouse of just enough control to keep
the trust assets our of the spouse's estate.
Given that, would language in a will saying something like
"...everything to my spouse, except that anything she disclaims
goes to the Foobar Family Trust" (assume that language is valid
in the state the will is drawn under) successfully allow the
surviving spouse to choose how much of the decedent's estate tax
exemption she wishes to "waste" in return for outright ownership
of more assets? By "successful" I mean that the disclaimed amount
will *not* be considered part of the unlimited marital exemption?
Reason why I am asking -- as you all know, a common estate-planning
device is to use a trust to preserve the decedent's estate tax exemption
even if (say) he wanted it all to go to the spouse. So if the
decedent died with $3mil of assets at a time where the exemption shielded
$1mil from the estate tax, he'd put $1mil into the trust and leave the
remaining $2mil to the spouse.
The problem (to me) of doing this inflexibly (by having the will
specify an actually dollar amount or by reference to the currently
in-effect exemption amount) is that due to increases in the exemption,
bad investment performance, etc., that approach might leave the spouse
with far less outright ownership than was intended. For example,
say that at death the decedent's assets were only $1,100,000. Then
$1,000,000 would go into the trust and the spouse would only own
The idea of the disclaimer would be to let the surviving spouse set
her desired balance between preserving the exemption and outright
ownership rather than leaving it to the static words in the will.
Thus the question if whether from an estate tax perspective the
disclaimer approach will work.
Rich Carreiro email@example.com