What is a Disclaimer?
Qualified Disclaimers: A tool for when you would prefer not to accept an inheritance
A qualified disclaimer is a formal refusal to accept property or assets being distributed from an estate or trust. When a beneficiary disclaims (ie, refuses) an inheritance, it passes to another beneficiary as if the disclaiming person never had ownership of it in the first place. Under RCW 11.86.041(1), “[u]nless the instrument creating an interest directs to the contrary, the interest disclaimed shall pass as if the beneficiary had died immediately prior to the date of the transfer of the interest.” The reasons a person may not want to receive an inheritance are varied and range from wanting to reduce their own taxable estate to just not wanting a specific problematic asset.
In Washington, married couples with combined assets exceeding the Washington estate tax exclusion amount (still $2.193 million for 2025) often include Disclaimer Trusts in their wills or revocable living trusts. A typical Disclaimer Trust provides that any assets disclaimed by a surviving spouse when one spouse dies will be distributed to a trust for the benefit of the surviving spouse for their lifetime (the Disclaimer Trust). The benefit of funding the Disclaimer Trust is that assets in the trust will not be included in the surviving spouse’s Washington taxable estate when they die.
A qualified disclaimer allows the disclaimed assets to be excluded from the beneficiary’s estate for tax purposes. How does a disclaimer qualify as “qualified”? It must meet certain legal requirements under federal law and, for Washington estates, under Washington law at RCW 11.86.031.
Requirements for a qualified disclaimer
The requirements for a qualified disclaimer are specific and must be strictly followed. It’s best to consult with an attorney and other advisors before deciding to make a disclaimer. Under both federal and Washington law, a qualified disclaimer must be:
- In writing
- Signed by the person disclaiming the interest
- Identify the interest being disclaimed
- Delivered to the transferor of the disclaimed interest within 9 months of the date of the transfer or the date the beneficiary attains 21 years of age.
In addition, the person making the disclaimer cannot have accepted or enjoyed the benefit of the asset. In other words, the person disclaiming the inheritance must not have taken possession, used, or profited from the asset before making the disclaimer.
Estate planning benefits of a disclaimer
The greatest benefit of a qualified disclaimer is that it allows assets to bypass the disclaiming beneficiary’s estate. This can reduce the estate taxes owed by that beneficiary’s estate on their death. As discussed above, married couples may plan for the surviving spouse to make a qualified disclaimer and reduce the estate tax owed by the second spouse’s estate by providing for assets disclaimed by the surviving spouse to be distributed to a trust in the first spouse to die’s will or revocable living trust.
A qualified disclaimer can also be an effective tool in situations where a beneficiary just does not want to receive certain assets. For example, if a person doesn’t want to take on the responsibilities or liabilities of inheriting a business, contaminated real estate, or other burdensome property, they may choose to disclaim it, allowing it to pass to someone who is willing to accept it.
To learn more about Washington’s Disclaimers or any other aspect of Estate Planning, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.
