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26 CFR Ch. I (4–1–10 Edition)

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26 CFR Ch. I (4–1–10 Edition) § 25.2518–2 26 CFR Ch. I (4–1–10 Edition) the decedent, has made a qualified dis- the will. The will provides that any dis- claimer. If the disclaimer is not a claimed property is to pass to the residuary qualified disclaimer, for the purposes estate. H has no interest in the residuary es- of the Federal estate, gift, and genera- tate. Under the applicable laws of State Y, a tion-skipping transfer tax provisions, disclaimer must be made within 6 months of the death of the testator. Seven months the disclaimer is disregarded and the after F’s death, H disclaimed the real prop- disclaimant is treated as having re- erty H received under the will. The dis- ceived the interest. claimer statute of State Y has a provision (c) Effect of local law—(1) In general— stating that an untimely disclaimer will be (i) Interests created before 1982. A dis- treated as an assignment of the interest dis- claimer of an interest created in a tax- claimed to those persons who would have able transfer before 1982 which other- taken had the disclaimer been valid. Pursu- wise meets the requirements of a quali- ant to this provision, the disclaimed prop- fied disclaimer under section 2518 and erty became part of the residuary estate. As- the corresponding regulations but suming the remaining requirements of sec- tion 2518 are met, H has made a qualified dis- which, by itself, is not effective under claimer for purposes of section 2518 (a). applicable local law to divest owner- Example (2). Assume the same facts as in ship of the disclaimed property from example (1) except that the law of State Y the disclaimant and vest it in another, does not treat an ineffective disclaimer as a is nevertheless treated as a qualified transfer to alternative takers. H assigns the disclaimer under section 2518 if, under disclaimed interest by deed to those who applicable local law, the disclaimed in- would have taken had the disclaimer been terest in property is transferred, as a valid. Under these circumstances, H has not result of attempting the disclaimer, to made a qualified disclaimer for purposes of another person without any direction section 2518 (a) because the disclaimant di- rected who would receive the property. on the part of the disclaimant. An in- Example (3). Assume the same facts as in terest in property will not be consid- example (1) except that the law of State Y ered to be transferred without any di- requires H to pay a transfer tax in order to rection on the part of the disclaimant effectuate the transfer under the ineffective if, under applicable local law, the disclaimer provision. H pays the transfer disclaimant has any discretion (wheth- tax. H has make a qualified disclaimer for er or not such discretion is exercised) purposes of section 2518 (a). to determine who will receive such in- (d) Cross-reference. For rules relating terest. Actions by the disclaimant to the effect of qualified disclaimers on which are required under local law the estate tax charitable and marital merely to divest ownership of the prop- deductions, see §§ 20.2055–2(c) and erty from the disclaimant and vest 20.2056(d)–1 respectively. For rules re- ownership in another person will not lating to the effect of a qualified dis- disqualify the disclaimer for purposes claimer of a general power of appoint- of section 2518(a). See § 25.2518–2(d)(1) ment, see § 20.2041–3(d). for rules relating to the immediate vesting of title in the disclaimant. [T.D. 8095, 51 FR 28370, Aug. 7, 1986, as amend- (ii) Interests created after 1981. [Re- ed by T.D. 8744, 62 FR 68185, Dec. 31, 1997] served] (2) Creditor’s claims. The fact that a § 25.2518–2 Requirements for a quali- disclaimer is voidable by the fied disclaimer. disclaimant’s creditors has no effect on (a) In general. For the purposes of the determination of whether such dis- section 2518(a), a disclaimer shall be a claimer constitutes a qualified dis- qualified disclaimer only if it satisfies claimer. However, a disclaimer that is the requirements of this section. In wholly void or that is voided by the general, to be a qualified disclaimer— disclaimant’s creditors cannot be a (1) The disclaimer must be irrev- qualified disclaimer. ocable and unqualified: (3) Examples. The provisions of para- (2) The disclaimer must be in writing; graphs (c) (1) and (2) of this section (3) The writing must be delivered to may be illustrated by the following ex- the person specified in paragraph (b) (2) amples: of this section within the time limita- Example (1). F dies testate in State Y on tions specified in paragraph (c)(1) of June 17, 1978. G and H are beneficiaries under this section; 596 VerDate Nov<24>2008 16:00 Apr 21, 2010 Jkt 220097 PO 00000 Frm 00606 Fmt 8010 Sfmt 8010 Q:\26\26V14.TXT ofr150 PsN: PC150 Internal Revenue Service, Treasury § 25.2518–2 (4) The disclaimant must not have (3) Transfer. (i) For purposes of the accepted the interest disclaimed or any time limitation described in paragraph of its benefits; and (c)(1)(i) of this section, the 9-month pe- (5) The interest disclaimed must pass riod for making a disclaimer generally either to the spouse of the decedent or is to be determined with reference to to a person other than the disclaimant the transfer creating the interest in without any direction on the part of the disclaimant. With respect to inter the person making the disclaimer. vivos transfers, a transfer creating an (b) Writing—(1) Requirements. A dis- interest occurs when there is a com- claimer is a qualified disclaimer only if pleted gift for Federal gift tax purposes it is in writing. The writing must iden- regardless of whether a gift tax is im- tify the interest in property disclaimed posed on the completed gift. Thus, gifts and be signed either by the disclaimant qualifying for the gift tax annual ex- or by the disclaimant’s legal represent- clusion under section 2503(b) are re- ative. garded as transfers creating an interest (2) Delivery. The writing described in for this purpose. With respect to trans- paragraph (b)(1) of this section must be fers made by a decedent at death or delivered to the transferor of the inter- transfers that become irrevocable at est, the transferor’s legal representa- death, the transfer creating the inter- tive, the holder of the legal title to the est occurs on the date of the decedent’s death, even if an estate tax is not im- property to which the interest relates, posed on the transfer. For example, a or the person in possession of such bequest of foreign-situs property by a property. nonresident alien decedent is regarded (c) Time limit—(1) In general. A dis- as a transfer creating an interest in claimer is a qualified disclaimer only if property even if the transfer would not the writing described in paragraph be subject to estate tax. If there is a (b)(1) of this section is delivered to the transfer creating an interest in prop- persons described in paragraph (b)(2) of erty during the transferor’s lifetime this section no later than the date and such interest is later included in which is 9 months after the later of— the transferor’s gross estate for estate (i) The date on which the transfer tax purposes (or would have been in- creating the interest in the cluded if such interest were subject to disclaimant is made, or estate tax), the 9-month period for (ii) The day on which the disclaimant making the qualified disclaimer is de- attains age 21. termined with reference to the earlier (2) A timely mailing of a disclaimer transfer creating the interest. In the treated as a timely delivery. Although case of a general power of appointment, section 7502 and the regulations under the holder of the power has a 9-month that section apply only to documents period after the transfer creating the to be filed with the Service, a timely power in which to disclaim. If a person mailing of a disclaimer to the person to whom any interest in property described in paragraph (b)(2) of this passes by reason of the exercise, re- section is treated as a timely delivery lease, or lapse of a general power de- if the mailing requirements under sires to make a qualified disclaimer, paragraphs (c)(1), (c)(2) and (d) of the disclaimer must be made within a § 301.7502–1 are met. Further, if the last 9-month period after the exercise, re- day of the period specified in paragraph lease, or lapse regardless of whether (c)(1) of this section falls on Saturday, the exercise, release, or lapse is subject Sunday or a legal holiday (as defined in to estate or gift tax. In the case of a paragraph (b) of § 301.7503–1), then the nongeneral power of appointment, the delivery of the writing described in holder of the power, permissible ap- paragraph (b)(1) of this section shall be pointees, or takers in default of ap- considered timely if delivery is made pointment must disclaim within a 9- on the first succeeding day which is month period after the original trans- not Saturday, Sunday or a legal holi- fer that created or authorized the cre- day. See paragraph (d)(3) of this section ation of the power. If the transfer is for for rules applicable to the exception for the life of an income beneficiary with individuals under 21 years of age.
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