Disclaiming money from a trust?

Probably, but not necessarily. The laws vary slightly state to state, and you need to check on the intestacy laws where you are.

The trust wouldn't say anything about it unless it wanted to avoid the possibility of your doing it. It's allowed by the law, not by the trust.

In general you would write to the trustee (within 9 months) that you are disclaiming the gift - and a reference to the statute under which you are doing so would be helpful but probably not necessary.

In any case, again the laws on this may vary from state to state, so you should check with a local estate planning attorney just to make certain you are doing it correctly.

All this talk of refusing an inheritance reminded me of Drey V. United States

a decision We (US) were able to rely on a few years later in one of my collection cases. No mention of a tax debt in this thread but an indicator of why one should seek legal advice before proceeding.

I haven't read your other post and Stuart's replies. Here are my comments: I have never seen a trust that did not address what happens if a beneficiary predeceases the owner.

I have never seen a trust that did not address what discretionay powers the trustee has for making distributions.

Therefore, you should carefully reread the document to make sure that you are the sole beneficiary, there are no remainder or contingent beneficiaries and the trustee has no discretionary powers for making distributions.

Assuming that it is only you... if you disclaim, you are treated as having predeceased your mother. The assets would then belong to your mother's estate. One would then look to your mother's will. I must state here that I have never seen an estate plan that had a trust that did not also have a will to dispose of those items not in the trust. If there is a will then it just might have a clause that addresses the remainder or residual amount of your mother's estate. At the time of the will's creation, the residual amount may have been almost nothing. But if you disclaim, then the residual amount is now the bulk. Assuming there is no will or if there is a will and you are the named beneficiary, disclaiming places everything under New York intestate law. Under NY law, it would pass to your mother's descendants per stirpes. It is the "per stirpes" that could throw a wrench into this. The estate goes to your mother's living descendants. If you were an only child, then the estate goes to your children equally. However, if you had a sibling who had died and that sibling had children (your nephews or nieces), then the "per stirpes" means that the estate is divided equally among all of your mother's living grandchildren.

So.... what all this means if you disclaim, is that your children would get the entire estate if you are the only beneficiary named in the trust and any will, the trustee has no discretionary powers of distribution, the will does does not address what happens to the residual estate, you have no living siblings and no living nieces and nephews.

Lastly, as Stuart said, you have nine months from the date of death to notify the trustee and the IRS that you are disclaiming. The disclaimer must conform to NYS and IRS law....... another reason why you want a professional to execute it.

I ran this by my lawyer. She says that a disclaimer must be made within 9 months of a death for an estate, but for a trust it is 9 months from when the trust is created. Now all I can make is a non-qualified disclaimer, which is effectively a gift.

At least under federal law, your lawyer is wrong. Internal Revenue Code ?2518 says in relevant part,

" Qualified disclaimer defined ? For purposes of subsection (a), the term "qualified disclaimer" means an irrevocable and unqualified refusal by a person to accept an interest in property but only if ?

"(1) such refusal is in writing,

"(2) such writing is received by the transferor of the interest, his legal representative, or the holder of the legal title to the property to which the interest relates not later than the date which is 9 months after the later of ?

"(A) the day on which the transfer creating the interest in such person is made, or

"(B) the day on which such person attains age 21,

"(3) such person has not accepted the interest or any of its benefits, and

"(4) as a result of such refusal, the interest passes without any direction on the part of the person making the disclaimer and passes either ?

"(A) to the spouse of the decedent, or

"(B) to a person other than the person making the disclaimer."

For a revocable trust, "the day on which the transfer creating the interest in such person is made" is the date of death of the donor. Because until that time the named beneficiary has only an expectency, since the original donor can change the trust at any time and the gift could go away.

The OP stated that this was a Crummey Trust. As such, aren't the amounts contributed deemed to be completed gifts to the donee? And, wouldn't

2(A) or 2(B) above be relevant? Also see Regs. Sections 25.2518-2(c)(3) and Section 25.2518-2(d)(1). IRS explanation of those two sections are below.

Therefore, I would conclude that the 9 month period to disclaim commenced on the date of each transfer to the trust or age 21 if later.

Section 25.2518-2(c)(3) of the regulations provides that the nine month period for making a disclaimer generally is to be determined with reference to the taxable transfer creating the interest in the disclaimant. With respect to inter vivos transfers, a taxable transfer occurs when there is a completed gift for federal gift tax purposes regardless of whether a gift tax is imposed on the completed gift. With respect to transfers made by a decedent at death or transfers that become irrevocable at death, a taxable transfer occurs upon the date of the decedent's death.

Section 25.2518-2(d)(1) of the regulations provides in part that a qualified disclaimer cannot be made with respect to an interest in property if the disclaimant has accepted the interest or any of its benefits, expressly or impliedly, prior to making the disclaimer. Acceptance is manifested by an affirmative act that is consistent with the ownership of the interest in property.

Thanks, yes. I'd forgotten about that. For tax purposes the gift becomes complete at that time, and the trust is a grantor trust (taxable to the beneficiary) to the extent it contains Crummey contributions.

Yes, I agree.

See my reply of Jul. 24, 2014 in this thread, that deals with the time period to disclaim when you have a Crummey Trust.

Personally I would take a look at gifting your trust interest. The advantage is that opposed to a disclaimer, you can direct how much and to whom. Given the current parameters of estate and gift tax using part of your lifetime exclusion shouldn't matter.

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