What is a Disclaimer in estate planning?

In estate planning, a disclaimer refers to a legal document that allows a beneficiary to voluntarily refuse an inheritance or gift they are entitled to receive. This can be beneficial for various reasons, including tax considerations, asset protection, or personal preferences. When a beneficiary disclaims an inheritance, the property is typically redirected to the next eligible heir or beneficiary, rather than passing to the disclaimant.

This option accurately captures the essence of a disclaimer, demonstrating its function in estate planning: it offers an avenue for beneficiaries to decline assets without facing adverse tax consequences, allowing for the potential reinvestment of those assets or their distribution according to the terms of the will or state intestacy laws.