Disclaimer trust

Disclaimer trust
See also

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[1][2]. Disclaimer trust is a powerful tool for many individuals, because is offers the asset transmission defined as beneficiary instead of gift status exposed to different taxes, which are necessery in property area[3][4].

Disclaimer trust in practice[edit]

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.

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. Nonmartial trust seems to be the best possible action they may take[5].

Disclaimer which is qualified cannot be refuse, it means it is irrevocable to accept an interest in property if following points is fullfilled[6].:

  1. It is in writing.
  2. There has passed no more than 9 months since disclaimant got age 21 or the interest has been made.
  3. Disclaiment didn’t refuse the interest and any benefits before.
  4. Disclaimer must be effective and fill requirements of local law.

It is becoming more and more popular estate planning vehicle. I makes asset transfer in different direction much more flexible. Making decision may be valuable not only for the owner, but also rest of the closest family[7].


  1. A. J.Hirsch 2001, 109
  2. J. H. Martin 2004, 280
  3. D. C. Reardon 2003, 17
  4. M. Cabral & C. Hoxby 2012, 6
  5. J. H. Martin 2004, 275
  6. D. C. Reardon 2003, 17
  7. D. C. Reardon 2003, 17


Author: Krystian Prorok