"DISCLAIMERS AND DISCLAIMER TRUSTS
BYRobert J. Kolasa, C.P.A., J.D., LL.M. (Tax)582 N. Oakwood, Suite 200Lake Forest, IL 60045(708) 234-6262
I. WHAT IS A DISCLAIMER?
A.Refusal to accept an interest in property to which the disclaimant is entitled by virtue of gift,descent, bequest, contract, survivorship, or otherwise.B.Statutory Requirements under Internal Revenue Code Section 2518. A "qualifieddisclaimer" means an irrevocable and unqualified refusal by a person to accept an interestin property that satisfies the following four conditions:
. The refusal is made in writing, identifies the interestdisclaimed and is signed by the disclaimant or his legal representative;
TIME - 9 MONTHS RULE
. The written refusal is received by the transferor no later than
after the date on which the transfer creating the interest is made (i.e.,9 months from date of death for testamentary transfers; 9 months from date of "completed gift" for intervivos transfers). For disclaimers of an expectancy under awill, the disclaimer should be delivered to the executor and an executed copy filedwith the probate court. For disclaimers of real estate, the disclaimer should bedelivered and an executed counterpart filed with the Recorder of Deeds.Exception for Minors: A beneficiary who is under 21 years of age has until9 months after his 21st birthday in which to make a qualified disclaimer.Any actions taken with regard to an interest in property by a beneficiary or a custodian prior to the beneficiary’s 21st birthday will not be an acceptance by the beneficiary of the interest. (Treasury Regulations Section 25.2518-2(d)(3) and (4), examples (9), (10), and (11).Example: Grandfather makes a gift of stock to Father as custodian for Grandson under the Illinois Transfer to Minors Act. At the time of the gift,Grandson is 10 years old. Prior to Grandson attaining age 21, income fromthe custodial account is routinely applied for Grandson’s benefit. Grandsoncan disclaim the custodial account within 9 months after his 21st birthday.If a disclaimer is desired when Grandson is a minor, a guardianshipgenerally needs to established with the probate court finding under Section2-7(a) of the Probate Act that the disclaimer "is not materially detrimentalto the interests of the ward." (755 ILCS 5/2-7(a))