Probate & Trust Law Section Conference Manual ... - Minnesota CLE

I. Introduction
Disclaimers have long been an important tool in the estate planner’s toolbox, but they have been
especially useful during the past decade as we’ve coped with both the ever-changing federal
estate tax exemption amounts and the disconnect between the state and federal estate tax
exemption amounts.Because of the flexibility they afford, disclaimers will continue to be an
important post-mortem planning device.
In this paper I will briefly review the requirements of a disclaimer under State law and a
“qualified disclaimer”under the Internal Revenue Code. I will then focus on the use of formula
disclaimers as means of allocating hard-to-value assets to the credit shelter trust. Finally, I will
discuss the Federal Tax Court case Wandry v. Commissioner, T.C. Memo 2012-88 (March
26,2012) and the Eighth Circuit decision in Estate of Christiansen, 586 F.3d 1061 (8 th Cir. 2009),
two cases that read together offer an excellent guideline for an effective pecuniary formula
disclaimer.
II. Disclaimers Under State Law
Minnesota adopted the Uniform Disclaimer of Property Interests Act, (“the Act”) effective
January 1, 2010. The Act is codified at Minnesota Statutes §§ 524.2-1101 – 524.2-1116. Under
the Act a person may disclaim, in whole or in part, any interest in or power over property,
including a power of appointment, even if the creator of the interest imposed a spendthrift
provision or a restriction or limitation on the right to disclaim.To be effective under the Act, a
disclaimer must (1) be in writing, (2) declare the writing as a disclaimer, (3) describe the interest
or power disclaimed, (4) be signed by the person or fiduciary making the disclaimer and be
acknowledged in the manner provided for deeds of real estate to be recorded, and (5) be
delivered or filed in the manner provided in section 524.2-1114. Minn. Stat. §524.2-1107.A
disclaimer under the Act is not a transfer, assignment or release of the interest disclaimed.Id.
In the case of a disclaimer of an interest created by will, other than an interest in a testamentary
trust,the disclaimer must be delivered to the personal representative of the decedent's estate; if no
personal representative is serving when the disclaimer is sought to be delivered, the disclaimer
must be filed with the clerk of the court in any county where venue of administration would be
proper.Minn. Stat. §524.2-1114. In the case of a disclaimer of an interest in a testamentary
trustthe disclaimer must be delivered to the trustee serving when the disclaimer is delivered or, if
no trustee is then serving, to the personal representative of the decedent's estate.If no personal
representative is serving when the disclaimer of an interest in a testamentary trust is sought to be
delivered, the disclaimer must be filed with the clerk of the court in any county where venue of
administration of the decedent's estate would be proper.Id.If the disclaimer is of an interest in an
inter vivos trustthe disclaimer must be delivered to the trustee serving when the disclaimer is
delivered, or if no trustee is then serving, it must be filed with the clerk of the court in any county
where the filing of a notice of trust would be proper. Id.
Delivery of a disclaimer may be effected by personal delivery, first-class mail, or any other
method that results in its receipt.Id. Delivery of a disclaimer of an interest in or relating to real
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