Explain the terms of a qualified Disclaimer

Expert Solution

Everyone likes receiving gift, but even Gifts are taxable. Many a times it is seen that value of gift received by a person may be less that the tax implication it brings as a result of which the person receiving a gift is put at a disadvantage or recipient does not believe that he should have the property or there may be any other reason. In those cases the receiver can DISCLAIM the gift. IRS offers an option where a person can irrevocable refuse to accept any interest or benefit in a property that is being given to him as a gift out of his own will, such an option is called QUALIFIED DISCLAIMER.
There are some terms that must be met for a qualified disclaimer, such are as follows:
1- The disclaimer must be in writing and it must also be signed by the party who is disclaiming the property as a gift. The property that was being given as gift must also be identified.
2- The Written disclaimer must be received by Transferor of property, his legal representative or any other person who is holding legal title of the property within a period of 9 months from the date of transfer of property or if the disclaimer is under the age of 21 years, than within a period of 9 months from his 21st birthday
3- The person who is disclaiming the property must not have accepted any interest or benefit in the property that was gifted to him because once he accepts any benefit than the property cannot be disclaimed
4- The property must pass to any person other than the Disclaimer and there must be no discretion on the part of disclaimer regarding to whom the property must be transferred.

If all the above 4 terms are met that such disclaimer is QUALIFIED and the property is transferred to the next best person other than the disclaimer. The disclaimer is free from any tax liability related to such property as gift given that his disclaimer was Qualified

ekkarill92 answered 1 year ago

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