How to Amend Estate Plan After Death

Believe it or not, an estate plan can be amended after death. Huh?

This is not about conjuring someone up from the dead. It’s about a Disclaimer.

If you are a beneficiary of someone’s estate, you can say “Thanks, but no thanks,” and your inheritance can skip you and go to your children. This is called a disclaimer. A disclaimer must be in writing signed and notarized by you within nine months of the date of death.

Example: Your father died. His living trust leaves you half of his estate. For various reasons, which could include estate tax reasons, you would rather your inheritance go directly to your children. You could make this happen by signing a written disclaimer. The disclaimer, which must have the correct provisions from the probate code, will operate to distribute your inheritance as if you had died before your father. In most cases (depending on how your father’s living trust or will was written), this would get your inheritance to your children.

Many lawyers and clients are not aware of the disclaimer strategy. We call it post-death estate planning. A disclaimer can be very useful if 1) you already have a taxable estate and don’t need the inherited assets, 2) you were going to leave the inherited assets to your children anyway, and 3) you want to avoid the government taking an estate tax bite on the inherited assets when you pass away.

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Comments

  1. Great article Clark. Qualified dislaimers are a great post mortem planning tool. In addition, something called a disclaimer trust mechanism can be used in the context of surviving spouses disclaiming their bequests and having them fall into a residual unified credit trust.
    Finally, the use of limited and general powers of appointment can be implemented into trust documents to give a surving spouse post mortem power to change the donative scheme of a decedent’s trust.

  2. Thanks for your comment Steven. Yes we include an option to use disclaimer trusts in most of our joint living trusts and almost always include powers of appointment. And the powers of appointment have been very beneficial for our clients in several trust administrations we’ve done.

  3. Your comment about joint living trust raises a question. Do you use them because of community property laws in CA? These are not used in PA, so I was curious. Can these joint living trusts create problems or have some very specific reasons for their usage?

  4. Steven, CA is a community property state so we almost always use joint living trusts.

  5. Thanks for the insights Clark.