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Intestacy and filing disclaimers

ADDITIONAL INFORMATION:

My grandfather, a PA resident, passed away earlier this month and left no will. He and my grandmother (still living) held accounts jointly as well as separately. Because he died intestate, his personal accounts will be divided between my grandmother and the three children. The children do not want the money and would rather let my grandmother keep it. If they each file a disclaimer, does the money go to my grandmother or to myself and my cousins? If transferred to my grandmother, is this amount free of Federal and State estate tax? If not, is it subject to gift tax if it exceeds the annual limit? Even if it is subject to inheritance tax, would disclaimer still be an option to avoid the gift tax of a subsequent transfer to my grandmother?

ATTORNEY ANSWER:
The legal effect of a Disclaimer is that the person disclaiming is deemed to have predeceased the decedent. According to 20 Pa. CS. section 2102 § 2102. Share of surviving spouse. The intestate share of a decedent’s surviving spouse is:

(1) If there is no surviving issue or parent of the decedent, the entire intestate estate.
(2) If there is no surviving issue of the decedent but he is survived by a parent or parents, the first $30,000 plus one-half of the balance of the intestate estate.  Notwithstanding the foregoing, in the case of a decedent who died as a result of the terrorist attacks of September 11, 2001, a surviving spouse shall be entitled to 100% of any compensation award paid pursuant to the Air Transportation Safety and System Stabilization Act (Public Law 107-42, 115 Stat. 230).
(3) If there are surviving issue of the decedent all of whom are issue of the surviving spouse also, the first
$30,000 plus one-half of the balance of the intestate estate.
(4) If there are surviving issue of the decedent one or more of whom are not issue of the surviving spouse, one-half of the intestate estate.
(5) In case of partial intestacy any property received by the surviving spouse under the will shall satisfy pro tanto the $30,000 allowance under paragraphs (2) and (3).

Therefore it is not enough for only the children to disclaim, all the issue must disclaim. Your family should consult with an estate planning attorney in your area, especially if your family is concerned over estate taxes and gift taxes.  In order for a disclaimer to not have adverse gift tax consequences, the disclaimer must comply with the Internal Revenue Code’s requirements for the disclaimer to be a “Qualified Disclaimer.”

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida, Waltham, Massachusetts, and Salem, New Hampshire.

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