§2518 — Disclaimers

Section 2518 provides an exception which allows a disclaimant to avoid the second transfer tax for a transfer of an interest in property resulting from a qualified disclaimer .

After concessions, including respondent's concession of the penalty, the sole issue remaining for decision is whether, for purposes of section 2518, decedent made a qualified disclaimer of property having a value of $455,753, or of any other amount, that otherwise would have passed to him from his predeceased spouse as part of the residue of her estate.

to the disclaimer — a “savings clause.” This clause said that to the extent that the disclaimer set forth above in this instrument is not effective to make it a qualified disclaimer, Christine Christiansen Hamilton hereby takes such actions to the extent necessary to make the disclaimer set forth above a qualified disclaimer within the meaning of section 2518 of the Code.

provides for a deduction from the gross estate of a decedent for the value of property that passes from the decedent to the surviving spouse. Section 2046 provides that disclaimers of property interests passing upon death are treated as provided in section 2518. - 6 - Section 2518 provides that, if a person makes a qualified disclaimer with respect to any interest in property, the disclaimed interest is treated as if it had never been transferred to the person making the qualified disclaimer. T

If a surviving spouse disclaims an interest in property passing to such spouse from a decedent, the efficacy of the disclaimer will be determined by section 2518 and the corresponding regulations.

2002), the Court of Appeals for the Eighth Circuit upheld the validity ofsection 25.2518-3(b), Gift Tax Regs., which provides the same definition for an undivided portion ofa disclaimant's entire interest in property for purposes ofsection 2518." In discerning the meaning of"undivided interest", the Court ofAppeals stated: The term "undivided" in its common usage means "not separated out into parts or shares." Webster's Third New International Dictionary 2492 (1986).

342 (8th Cir. 2002), the Court of Appeals for the Eighth Circuit upheld the validity of section 25.2518-3(b), Gift Tax Regs., which provides the same definition for an undivided portion of a disclaimant’s entire interest in property for purposes of section 2518. In discerning the meaning of “undivided interest”, the Court of Appeals stated: The term “undivided” in its common usage means “not separated out into parts or shares.” Webster’s Third New International Dictionary 2492 (1986). We are mo

were placed in Trust B and distributed to the beneficiaries thereof. - 2 - Held: Trust assets worth approximately $617,317 at D’s date of death are includable in the gross estate on account of absence of a disclaimer qualified within the meaning of sec. 2518, I.R.C. Held, further, no charitable deduction is allowable with respect to distributions to the American Cancer Society, Yale University School of Law, or the State of Israel. Richard V. Vermazen, for petitioner. Christine V. Olsen, for res

After concessions, the issues for decision are: (1) Whether a qualified disclaimer within the meaning of section 2518 was made with respect to trust assets worth approximately $617,317 at the date of death of Leona Engelman (decedent); and (2) whether, to the extent that the foregoing trust assets are included in the gross estate, the estate is entitled to a charitable deduction for certain amounts distributed.

m their interests.” Estate of Bennett v. Commissioner, 100 T.C. 42, 58 (1993). Nonetheless, such a disclaimer can be “qualified” and effective for purposes of Federal estate tax law only to the extent that it satisfies the requirements enumerated in section 2518. See sec. 2046. Section 2518 reads in part as follows: SEC. 2518. DISCLAIMERS. (a) General Rule.--For purposes of this subtitle, if a person makes a qualified disclaimer with respect to any interest in property, this subtitle shall apply

In the case of qualified disclaimers, moreover, section 2518 specifically provides that if a person makes a qualified disclaimer with respect to any interest in property, this subtitle shall apply with respect to such interest as if the interest had never been transferred to such person.

ecedent's death, Mrs. Rapp was entitled to receive annual distributions of all of the income from the trust because the actions of the co- trustees and the guardian ad litem in consenting to the reformation constituted a "qualified disclaimer" under section 2518. Fourth, petitioner argues that, as of the date of decedent's death, Mrs. Rapp was entitled to receive annual distributions of all of the income from the trust because the cotrustees were obligated to make such distributions to Mrs. Rapp

In the case of qualified disclaimers, moreover, section 2518 specifically provides that if a person makes a qualified disclaimer with respect to any interest in property, this subtitle shall apply with respect to such interest as if the interest had never been transferred to such person.