§ 343 DISCLAIMER

• Jurisdiction: South Carolina
• Section: Chapter 3 Wills

§ 343 Disclaimer

The SCPC allows any person, or one with authority to act in his behalf, to disclaim any interest in property transferred by any means whatsoever to the disclaimant.²⁷⁹ Upon an effective disclaimer, the disclaimed property is considered to have never been transferred to the disclaimant.²⁸⁰ The disclaimer relates back to the date when the transfer (by the transferor) of the interest became effective; for purposes of the disclaimed property interest, the disclaimant is deemed to have predeceased that date. For the purpose of a future interest that takes possession or enjoyment after the disclaimed interest terminates, the disclaimant is deemed to have died before the disclaimant's interest in the disclaimed property vested indefeasibly and before the disclaimant was finally ascertained.²⁸¹ An exception to the general rule that a disclaimant is treated as predeceased for all purposes applies if the disclaimant is a spouse of the transferor. Even though the spouse is deemed to have predeceased the effective date of the transfer for disclaimer purposes, the spouse is not deemed predeceased for other subsequent methods by which the property may be transferred to the spouse.²⁸²

Example

Testator (T) leaves her entire estate to her husband (H). T's will does not name a contingent beneficiary. T and H have no issue. H disclaims the devise. For purposes of that disclaimer, the Code considers H to be predeceased, and the disclaimed property will now pass by intestacy. For purposes of the determination of T's intestate heirs, the Code does not consider H as having predeceased T. H takes by intestacy, unless H also disclaims his intestate share.

Thus, a spouse intending to disclaim all rights to transferred property must disclaim not only the immediate method of transferring that property but all resulting methods as well.

SCPC section 2-801(d)(3) defines the date of the effectiveness of the transfer generally as the date when the transfer becomes irrevocable.

The SCPC recognizes the right to disclaim despite any spendthrift or similar restriction imposed by the transferror.²⁸³ The disclaimant can waive the right to disclaim.²⁸⁴

Section 2-801(c)(5) bars a disclaimer if the disclaimant waives the right to disclaim, accepts an interest in the property, or transfers or directs the interest. A judicial sale of the property also bars a disclaimer. Section 2-801(c)(7) provides that a disclaimer is ineffective merely because the disclaimant is insolvent. Thus, a disclaimer to avoid creditors may be effective.

Under the 2013 amendments, disclaimers that qualify for tax purposes satisfy section 2-801, but disclaimers that do not qualify for tax purposes are not automatically ineffective for property law purposes under section 2-801, and will be effective if the disclaimer complies with the requirements of section 2-801.²⁸⁵

Although the Internal Revenue Code imposes a time limit for a qualified disclaimer,²⁸⁶ the 2013 amendments expressly provide that, for property law purposes, a disclaimer is not time-barred if made within a reasonable time limit after the effectiveness of the transfer: for purposes of section 2-801, nine months after the effectiveness of the transfer is conclusively presumed to be a reasonable time.²⁸⁷ Moreover, the Internal Revenue Code generally starts the time-barring clock upon the transfer of the interest, whether it is a present or future interest. Section 2-801(c)(2) starts the time-barring clock once "the disclaimant acquires actual knowledge of the interest."²⁸⁸

Section 62-2-801. Disclaimer.

(a) This section applies to disclaimers of any interest in or power over property, whenever created, and, in addition to other methods, is the means by which a disclaimer may be made under the laws of this State.

(b) For purpose of this section:

(1) "Disclaimer" means any writing which disclaims, renounces, declines, or refuses an interest in or power over property.

(2) "Disclaimant" means the person to whom a disclaimed interest or power would have passed had the disclaimer not been made.

(3) "Disclaimed interest" means the interest that would have passed to the disclaimant had the disclaimer not been made.

(4) "Fiduciary" means a personal representative, trustee, agent acting under a power of attorney, guardian, conservator, or other person authorized to act as a fiduciary with respect to the property of another person.

(c) (1) A person may disclaim, in whole or in part, any interest in or power over property, including a power of appointment.

(2) Unless barred, a disclaimer must be made within a reasonable time after the disclaimant acquires actual knowledge of the interest. A disclaimer is conclusively presumed to have been made within a reasonable time if made within nine months after the date of effectiveness of the transfer as determined under subsection (d)(3).

(3) To be effective, a disclaimer must be:

(i) in writing;
(ii) declare the writing as a disclaimer;
(iii) describe the interest or power disclaimed; and

(iv) be delivered to the transferor of the interest, the transferor's fiduciary, the holder of the legal title to or the person in possession of the property to which the interest relates, or a court that would have jurisdiction over such interest or subject matter. A disclaimer of a power must be delivered as if the power disclaimed were an interest in property. Delivery of a disclaimer may be made by personal delivery, first-class mail, or any other method that results in its receipt. A disclaimer sent by first-class mail shall be deemed to have been delivered on the date it is postmarked.

(4) A disclaimer is not a transfer, assignment, or release if made within a reasonable time after the disclaimant acquires actual knowledge of the interest and if not otherwise barred.

(5) A barred disclaimer is ineffective as a disclaimer under this section. A disclaimer is barred by any of the following conditions occurring before the disclaimer becomes effective:

(i) the disclaimant waived in writing the right to disclaim;

(ii) the disclaimant accepted the interest sought to be disclaimed;

(iii) the disclaimant voluntarily assigned, conveyed, encumbered, pledged, transferred, or directed the interest sought to be disclaimed or has contracted to do so; or

(iv) a judicial sale of the interest sought to be disclaimed has occurred.

(6) A disclaimer is not barred by a spendthrift provision or similar restriction on transfer or the right to disclaim imposed by the creator of the interest in or power over the property.

(7) A disclaimer is not barred by a disclaimant's financial condition, whether or not insolvent, and a disclaimer that complies with this section is not a fraudulent transfer under the laws of this State.

(8) A disclaimer, in whole or in part, of the future exercise of a power held in a fiduciary capacity is not barred by its previous exercise.

(9) A disclaimer, in whole or in part, of the future exercise of a power not held in a fiduciary capacity is not barred unless the power is exercisable in favor of a disclaimant.

(10) Unless a disclaimer is barred, a disclaimer treated as a qualified disclaimer pursuant to Internal Revenue Code Section 2518 is effective as a disclaimer under this section.

(d) (1) If a disclaimant makes a disclaimer with respect to any transferor's transfer (including transfers by any means whatsoever, lifetime and testamentary, voluntary and by operation of law, initial and successive, by grant, gift, trust, contract, intestacy, wrongful death, elective share, forced share, homestead allowance, exempt property, devise, bequest, beneficiary designation, survivorship provision, exercise and nonexercise of a power, and otherwise) to the disclaimant of any interest in, including any power with respect to, property, or any undivided portion thereof, the interest, or such portion, is considered never to have been transferred to the disclaimant.

(2) Unless the transferor has provided otherwise in the event of a disclaimer, the disclaimed interest shall be transferred (or fail to be transferred), as if the disclaimant had predeceased the date of effectiveness of the transfer of the interest. The disclaimer shall relate back to that date of effectiveness for all purposes, and any future interest which is provided to take effect in possession or enjoyment after the termination of the disclaimed interest shall take effect as if the disclaimant had predeceased the date on which he or she as the taker of the disclaimed interest became finally ascertained and the disclaimed interest became indefeasibly vested. Provided, that an interest disclaimed by a disclaimant who is the spouse of a decedent, the transferor of the interest, may pass by any further process of transfer to such spouse, notwithstanding the treatment of the transfer of the disclaimed interest as if the disclaimant had predeceased.

(3) The date of effectiveness of the transfer of the disclaimed interest is (i) as to transfers by intestacy, wrongful death, elective share, forced share, homestead allowance, exempt property allowance, and devise and bequest, the date of death of the decedent transferor, or that of the donee of a testamentary power of appointment (whether exercised or not exercised) with respect to, the interest, as the case may be, and (ii) as to all other transfers, the date of effectiveness of the instrument, contract, or act of transfer.

(e) (1) If and to the extent an instrument creates a fiduciary relationship and expressly grants the fiduciary the right to disclaim, the fiduciary may disclaim, in whole or in part, any interest in or...