Disclaimers Under the Colorado Probate Code
| Publication year | 1978 |
| Pages | 1606 |
1978, September, Pg. 1606. Disclaimers Under the Colorado Probate Code
The use of disclaimers has traditionally been an important element in post-death estate planning. Although the Colorado statutes use both the terms "disclaimer" and "renunciation" in connection with the disavowal by a party of rights to succession, this column will simply use the term "disclaimer" to cover all situations.
Traditionally there have been both tax and nontax reasons for the use of disclaimers. Non-tax reasons might include the desire of a beneficiary to avoid an unwanted gift, or the intention to shift the benefits of ownership to a second taker, occasionally for the purpose of placing control of a family business in a more appropriate beneficiary, such as a younger generation beneficiary who is, in fact, running the business.
The tax benefits from the use of disclaimers have been more important and have more commonly accounted for their skilled use in post-death planning. Perhaps the most usual tax purpose in the use of the disclaimer is to pass property to another person, usually of a younger generation, without the imposition of an extra succession tax, either a gift tax or a second death tax. Disclaimers have also come to be commonly used by a surviving spouse to avoid marital deduction over qualification, the disclaimer relating to the excess of the bequest over the amount necessary to utilize the maximum marital deduction or to keep the estate nontaxable. With the recent changes of the 1976 Tax Reform act increasing the exemption equivalent to $175,000 and providing a marital deduction of $250,000 available to all estates, it may be expected that disclaimers in appropriate cases by the surviving spouse will be all the more important. [Frimmer, "Using Disclaimers in Post Mortem Estate Planning: 1976 Law Leaves Unresolved Issues," The Journal of Taxation (June, 1978).]
The traditional pattern of disclaimer statutes affects probate assets and allows a successor to disclaim an interest in either a testate or intestate estate. The effect of the disclaimer is as if the disclaiming party predeceased the decedent. The typical disclaimer statute also normally varies this rule (as to the effect of a disclaimer) to the extent that the dispositive instrument, normally a will, provides specifically for an alternative disposition in the event of disclaimer.
The mechanics of perfecting an effective disclaimer are also provided by statute, normally with a provision that alternate mechanics may be provided in the dispositive instrument so...
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