Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

D. Comply with requirements of the plan or IRA. Check whether the plan or IRA has its own requirements for disclaimers and comply with those (see ¶ 4.4.09 (B)).

E. Keep the disclaimer short. It’s tempting to recite, in the disclaimer, who will receive the property as a result of the disclaimer, but it’s a bad idea. If you mention who the property will pass to, it looks as if the disclaimant is trying to direct who will receive the property, or to make the disclaimer conditional on the property’s passing to those recipients, either of which actions would make the disclaimer not qualified under § 2518 . ¶ 4.4.02 (A), ¶ 4.4.08 (B). F. Know where the property will go before disclaiming it. Investigate THOROUGHLY who will receive the property as a result of the disclaimer. A child ( e.g. ) may assume that if he disclaims an inheritance from his father this will cause the inheritance to pass to his mother, only to find out later that the disclaimer caused the property to pass to some distant relatives of the father. See ¶ 4.4.08 (C). Here are the requirements for a qualified disclaimer under § 2518 ; see ¶ 4.4.03 for why it is important for the disclaimer to be “qualified.” A. The disclaimer must be irrevocable, unqualified (unconditional), and in writing. § 2518(b) . Yes, that’s right: In order to be qualified, the disclaimer must be unqualified! Verbal, revocable, and conditional disclaimers are not qualified disclaimers. Requirements for qualified disclaimer: § 2518

B. The person who is disclaiming (the “disclaimant”) must not have “accepted the interest disclaimed or any of its benefits.” § 2518(b)(3) . See ¶ 4.4.04 , ¶ 4.4.05 .

C. The disclaimer must be delivered by a certain deadline. For retirement plan death benefits, the deadline is normally nine months after the participant’s death. See ¶ 4.4.06 .

The disclaimer must be delivered to the correct party(ies). See ¶ 4.4.07 .

D.

E. The property must pass, as a result of the disclaimer, to someone other than the disclaimant. See ¶ 4.4.08 (A). Exception: Property can pass to the decedent’s spouse as a result of the disclaimer, even if she is also the disclaimant. § 2518(b)(4) . F. The property must pass, as a result of the disclaimer, to whoever it passes to without any direction on the part of the disclaimant. Disclaimers by the surviving spouse are NOT excepted from this rule. § 2518(b)(4) . See ¶ 4.4.08 (B). G. A disclaimer can be qualified under § 2518 even if it is not valid under state law. § 2518(c)(3) . The income tax effects of a qualified disclaimer that is not valid under state law are uncertain; see ¶ 4.4.03 .

Income tax treatment of disclaimers