When someone dies, their property enters a process called probate. In probate, the deceased person’s property is distributed to either the people the deceased person intended in a will, or through a statutory process called intestate succession. However, someone may not want to inherit the property due to them. The act of refusing an inheritance is called a disclaimer.
This article will discuss:
- What is disclaimer?
- Why might a person make a disclaimer?
- When may a person make a disclaimer?
- How does a person make a disclaimer?
- What happens to the disclaimed interest in property?
- Can a person disclaim an interest in jointly held property?
- Can a person disclaim a power granted to them?
- Are there times a person is barred from disclaiming an interest?
What is a disclaimer?
Disclaimer a person is rejecting property, or an interest in property, given to them in the will or through intestacy laws. The person making the disclaimer is called a disclaimant.
Why might a person make a disclaimer?
Someone may make a disclaimer if the inherited property is too complex or expensive for them to take care of. A person also simply may not like the item they are inheriting and choose to disclaim it. The property could also have negative tax consequences, or interfere with their ability to access government programs. A person may also prefer the property to go to someone else, as permitted by the will or Iowa law.
When may a person make a disclaimer?
In general, a person may disclaim any property or interest property whenever and however they acquire it. They may disclaim the entire interest, or part of an interest. They may do this even if there is a spendthrift provision or similar restrictions on transfer of the property.
How does a person make a disclaimer?
A disclaimer must be in writing or other record, and declared a disclaimer. The writing or record must describe the interest or power disclaimed, be signed by the disclaimant, and delivered or filed with the court. A disclaimer becomes irrevocable, or permanent, when it is delivered to a person set out in the disclaimer law for the particular case, or filed with the court.
The person to whom the disclaimer is mailed depends on how the disclaimed interest was created. Of note, if the interest was created by a will or is a product of intestate succession, the disclaimer must be sent to the personal representative (the executor or administrator of the estate), or filed with the court if there is no personal representative. Other delivery requirements are listed in Iowa Code chapter 633E.12.
If someone wishes to partially disclaim property, the disclaimer may be expressed as a fraction, percentage, amount of money, or for real property issues, a set amount of time, limitation of power, or other interest in the property.
What happens to the disclaimed interest in property?
The disclaimer takes effect when it is delivered or filed. If there is a document creating the property interest, like a will, and the instrument discusses what should happen if the property is disclaimed, the property will follow the instructions of this will.
If the will or other document does not contain a provision on what happens should the property be disclaimed, the disclaimed interest passes as if the disclaimant had died immediately before the time of distribution. The personal representative distributing the property would then either follow the will or intestacy laws to determine who would receive the property or interest in property. If the disclaimed interest were to someday go to another person anyway (called a future interest), the interest would go to that person as if the disclaimant died immediately before the time of distribution.
Can a person disclaim rights to jointly held property?
If the interest is a right which the deceased person held jointly with other persons, there are further rules. These rules are very complicated, and persons seeking to disclaim a jointly held interest should consult with an attorney.
Can a person disclaim power of appointment?
There may be situations where a person is appointed a power he or she does not want. A person may also disclaim these powers. The power will then be treated as expired when the disclaimer takes effect. If the person has already exercised the power, it is treated as expired as of the last exercise of the power.
If the power is held in a fiduciary capacity, such as an executor of an estate, the disclaimer takes effect when the instrument becomes irrevocable. If the person has exercised the power, the disclaimer takes effect immediately after the last exercise of power.
Is a person every barred or limited from making a disclaimer?
A person could be barred from making a disclaimer if they create a written waiver of the right to disclaim. A person will also be barred if, prior to the disclaimer becoming effective, the person accepts the property interest sought to be disclaimed, voluntarily transfers the interest sought to be disclaimed, or there is a judicial sale of the property.
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