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Disclaimers – Be Very Careful

Disclaimers are a source of many mistakes in the estate and trust field. Most people think that if you want to decline taking a bequest from the Will of a deceased person, all you need do is to sign a disclaimer. However, in a number of situations that would not only not meet your goals but would royally screw things up.

Here’s an example. Mother and father have 3 adult children. Child #1 has a 3 year old boy. Child #2 has a 10 year old girl and a 15 year old boy. Child #3 is single and  has no children. Father dies without a Will. Maryland law provides that his widow receives the first $40,000 and 50% of the remainder. The 3 children equally divide the remaining 50%. All of the children get together and decide that their mother should get everything. So, each child signs a disclaimer.

The problem is that the disclaimer statute provides that the effect of the disclaimer is that each child is treated as though they died right before their father. In such a situation, Maryland law provides that Child #1’s share would go to his 3 year old son – not to his mother. Child #2’s share would go to his 2 children – not his mother. Child #3’s share would go to his mother.

The best way to handle this situation is for the 3 children to assign their shares to their mother.

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