Planning for a Disclaimer in 5 Easy Steps

What is a disclaimer?

beneficiary disclaimerA disclaimer is a formal refusal of an inheritance (or part of an inheritance) by a beneficiary.  By creating a “path” for disclaimed assets to follow, a skilled planner can provide a beneficiary with the option to pass assets to alternate beneficiaries.

1. Make sure the IRA owner names contingent beneficiaries.  Naming a contingent beneficiary directly on the beneficiary form is good practice and a pivotal part of most disclaimer planning.  When a disclaimer is executed, the person making the disclaimer is treated as if he or she had predeceased the IRA owner.  The contingent beneficiary would then inherit the property.  If there is no contingent beneficiary listed, often the funds will default to the estate of the deceased IRA owner.

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