Posted in Finance, Accounting and Economics Terms, Total Reads: 251
Definition: Qualified Disclaimer
It is a refusal to accept the property, which meets with the provisions set forth in the IRCTRA, 1976 (Internal Revenue Code Tax Reform Act of1976) that allows for the the interest in the property or property to be treated as an entity which has never ever been received.
Such types of refusals are used for avoiding gift tax and federal estate tax, and for creating legal inter-generational transfers that avoids taxation, if they meet the following points or requirements:
1. The disclaimer should be made in written and signed.
2. The disclaimer should be written less than 9 months after the date the property was transferred.
3. The disclaimer should be delivered, in writing.
4. The disclaimer should identify interest in property or the property which is being disclaimed.
Because of the the strict regulations which determines if the disclaimers are considered "qualified" as per the standards of the IRC (Internal Revenue Code), it is important that the renouncing party understands the risks involved in disclaiming the property. In majority of cases, the tax consequences of getting the property fall far short of the expected value of the real estate or property itself. It is generally more beneficial to accept the property and pay the taxes on it and afterwards sell the property, rather than disclaiming interest in the property.
When used for the purpose of succession planning, the qualified disclaimers must be used for the wishes of the beneficiary, the deceased, and the contingent beneficiary.