-16-
disclaimer is not a qualified disclaimer with
respect to any portion of the property.
Thus, for example, if a disclaimant who is
not a surviving spouse receives a specific
bequest of a fee simple interest in property
and as a result of the disclaimer of the
entire interest, the property passes to a
trust in which the disclaimant has a
remainder interest, then the disclaimer will
not be a qualified disclaimer unless the
remainder interest in the property is also
disclaimed.
It’s the language we’ve italicized that seems to resolve this
issue. Hamilton: (a) is not a surviving spouse, (b) received a
specific bequest of a fee simple interest in her mother’s
property under the will, (c) as a result of the disclaimer that
property passed to a trust in which Hamilton had a remainder
interest, and (d) Hamilton did not disclaim that remainder
interest.
The consequences of this “partial failure of disclaimer” are
severe: not only does the estate not get a deduction for the
value of the remainder interest that might go to Hamilton (which,
we again note, it has never claimed), but it doesn’t get a
deduction for “any portion” of the property ending up in the
Trust.9 That’s what the sentence immediately preceding the
9 The property going directly to the Foundation under the
disclaimer doesn’t have this retained-interest problem, and so
its value is entirely deductible as a disclaimer of an “undivided
portion of an interest.” Sec. 2518(c)(1); sec. 25.2518-3(b),
Gift Tax Regs. (characterizing disclaimer of fractional interest
of “each and every substantial interest or right owned by the
disclaimant”). This is presumably why the Commissioner has
(continued...)
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