Disclaimer Trust

AAA

DEFINITION of 'Disclaimer Trust'

A trust that has embedded provisions (usually contained in a will) which allow a surviving spouse to put specific assets under the trust by disclaiming ownership of a portion of the estate. Disclaimed property interests are transferred to the trust, without being taxed.

Provisions can be written into the trust that provide for regular payouts from the trust to support survivors. Surviving minor children can also be provided for, as long as the surviving spouse elects to disclaim inherited assets, passing them on to the trust.

INVESTOPEDIA EXPLAINS 'Disclaimer Trust'

For example, if an individual passes away and leaves her husband an estate, he may disclaim some interests in the estate, which are then passed directly to the trust as though it were the original beneficiary. Minor children could then benefit from regular payouts from the trust.

Disclaimer trusts require that the survivor act according to the wishes of the deceased, and disclaim ownership of some of the assets bequeathed to him by the deceased. In the above example, if the surviving spouse does not disclaim ownership of any portion of the estate, then the deceased's wish to transfer assets to the surviving minor children goes unfulfilled. Because of the legal complexities involved, these trusts should only be set up by qualified professionals.

RELATED TERMS
  1. Estate Planning

    The collection of preparation tasks that serve to manage an individual's ...
  2. Estate Tax

    A tax levied on an heir's inherited portion of an estate if the ...
  3. Will

    A legally enforceable declaration of how a person wishes his ...
  4. Exemption Trust

    A trust whose purpose is to drastically reduce or eliminate federal ...
  5. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  6. Marital Deduction

    A tax deduction that allows an individual to transfer some assets ...
Related Articles
  1. Changes In Tax Legislation And Regulation
    Taxes

    Changes In Tax Legislation And Regulation

  2. Disclaiming Inherited Plan Assets
    Retirement

    Disclaiming Inherited Plan Assets

  3. Refusing An Inheritance
    Retirement

    Refusing An Inheritance

  4. If a trust is named as the beneficiary ...
    Retirement

    If a trust is named as the beneficiary ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center