Disclaimer trust allows to transfer property interests to the trust without being taxed. Usually its origin is will of passed spouse. It is necessary that second spouse acts according to the wishes of the passed one. There is a time limit to set up that kind of trust, e.g. in California it is 9 months. Disclaimer trust is different from traditional A/B trust, because it is allows to make decision about the plan later.
For example, if husband dies, wife can pass interests in the estate to the trust. The trust is then treated as it were the original beneficiary, therefore no tax is required. As a result, children can benefit from regular payouts.
Disclaimer trust is a complex legal construction, therefore it should be created with help of professionals. For example, it can bring problems with regard to inheritance. If the will is not precise it can be difficult to set disclaimer trust.
- Martin, J. H. (2004). The Joint Trust: Estate Planning in a New Environment. Real Property, Probate and Trust Journal, 275-313.
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