0

I am reading Utah Probate Code, 75-2-801 Disclaimer of property interests -- Time -- Form -- Effect -- Waiver and bar -- Remedy not exclusive -- Application.

Can someone state in plain English the meaning of paragraph 5 from two perspectives:

  • someone who is steadfast is wanting to disclaim
  • someone who is flip-flopping about wanting to disclaim

I copied the paragraph of interest below (fetched from https://le.utah.gov/xcode/Title75/Chapter2/C75-2-P8_1800010118000101.pdf)

=======

(5) The right to disclaim property or an interest therein is barred by:

(a) an assignment, conveyance, encumbrance, pledge, or transfer of the property or interest, or a contract therefor;

(b) a written waiver of the right to disclaim;

(c) an acceptance of the property or interest or a benefit under it; or

(d) a sale of the property or interest under judicial sale made before the disclaimer is made.

======

Note: After reading it a dozen times, I think maybe it means that the only way to disclaim is to (a) disclaim the specific thing in writing, and (b) anything that happened before that is irrelevant. So if you state or sign something to "waive the right to claim or to disclaim," then that is also irrelevant. You have not disclaimed anything at all.

2

@DM's answer is correct, but maybe not as straightforward as the OP might prefer.

Usually a disclaimer is made by giving timely written notice in proper form to the person who is in control of the inherited asset (using the word "inherited" in a broad non-technical sense) within the time allowed by statute. But, this can only be done if the rule that is stated in Utah Probate Code Section 75-2-801(5) does not prevent the person from doing that. This rule can be paraphrased as follows:

You cannot disclaim once you have taken actions consistent with ownership or you have waived the right to disclaim in writing.

An example may be helpful.

The classic screw up that gets made is that a surviving spouse is the beneficiary of a large life insurance policy (for example, $30,000,000). If the surviving spouse (who may have only a few years to live herself) receives these life insurance benefits, they will be subject to estate taxation at her death if not spent by then, and then will be subject to estate tax again when she leaves it to her children and they die owning those funds. But, if the wife had predeceased her husband, the funds would have gone to the children without being subject to estate taxation in the predeceased wife's estate. The tax at the death of the surviving spouse (who also had other substantial assets of her own) would be $10,000,000.

So, the family combined will pay significantly more taxes if the widow receives the benefits rather than they will if she disclaims the life insurance policy benefits, in which case they go to the secondary beneficiaries of the policy (the decedent and the surviving spouse's children in the next generation) without facing estate taxation in the named beneficiary surviving spouse's generation.

But, an overeager life insurance agent, trying to be helpful, gives the beneficiary a checkbook which allows the beneficiary to write checks against the amount due on the policy pending a full payout, and the surviving spouse uses the checkbook to pay a $10,000 funeral bill before conferring with a lawyer or accountant.

By doing so, the surviving spouse has lost the right to disclaim any of the $30,000,000 of funds payable from the life insurance policy pursuant to Utah Probate Code Section 75-2-801(5)(c). So, the overeager life insurance agent's attempt to bill helpful results in many millions of dollars of unnecessary tax liability for the family of the decedent.

The theory behind this harsh rule is to prevent people from "having it both ways." You either inherit something or you decline to accept the inheritance. Once you have taken any action that reveals an intent to do on or the other of these things, you aren't allowed to change your mind.

2

“The right to disclaim property or an interest therein is barred by…”?

This phrase means that you cannot disclaim something if one of the listed things happens.

I think maybe it means that the only way to disclaim is to (a) disclaim the specific thing in writing,

That's not necessarily the only way, because the law also says:

This section does not abridge the right of a person to waive, release, disclaim, or renounce property or an interest therein under any other statute.

So there might be other ways not listed here.

and (b) anything that happened before that is irrelevant.

Everything that happened before that is not irrelevant - you just listed several scenarios where this law says you can't disclaim. If you signed a waiver of your right to disclaim, then you cannot disclaim. If you accepted the property, you can't disclaim it. And so on.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.