Disclaimer Not Timely Filed

Submitted by Susan Comegys on Fri, 2014-10-31 13:51

An estate was held up in litigation for over a year. An IRA named an individual as the beneficiary who agreed to disclaim and turn over all estate assets to the executor. A court Order was presented to the IRA custodian stating the IRA is to be paid to the estate as the default contingent beneficiary. The custodian refuses to transfer the IRA to the estate claiming a disclaimer was not timely filed within 9 months as required by the IRS rules, and must be distributed to the individual. Why won’t the custodian comply with the court Order? What options are available to the estate to receive the IRA funds? The decedent died in April 2013 and a NJ resident.



Submitted by mk foss on Fri, 2014-10-31 19:07

When a disclaimer is filed within the 9 month period, the asset transfer to the contingent beneficiary is not treated as a gift. The disclaimer transfers property to whomever is the contingent beneficiary or if none is named ususally the owner’s estate. With an untimely disclaimer, the benefits would be taxed to the original beneficiary even if transferred. Bruce Steiner will know how the NJ law applies but in my experience the disclaimer is still followed it just has terrrible consequences. 



Submitted by Bruce Steiner on Sun, 2014-11-02 02:17

  • New Jersey allows disclaimers after nine months (though a disclaimer after nine months won’t be a qualified disclaimer for tax purposes, so it will may be a taxable gift).  However, even in New Jersey, you can’t disclaim after you’ve accepted the property or you’ve transferred or agreed to transfer the property.
  • If this was in litigation for over a year, the situation is probably complicated.  It would be helpful to know exactly what happened.


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