Hand-Written Listing of Assets Was Not Qualified Disclaimer

In 1987, H and W hired a law firm to handle their estate planning. They executed mutual wills, both of which provided that, if a disclaimer was made by the decedent, the disclaimed portion of the estate would go into a trust.

W died in December 1992. In late December 1992 and early January 1993, H and his attorney inventoried H and W's safe deposit box. H prepared a list, summarizing his and W's property and the values of each.

In early 1993 (and several times thereafter), H indicated to his son D that he would disclaim the assets in W's name. In March 1993, H's lawyer prepared such a disclaimer that he intended H to sign, but H never signed the document. In April 1993, H filed a state Probate Inventory, which listed the assets included in W's estate; this did not include any reference to a disclaimer of any assets by H.

In February 1994, H died. In November 1994, H's estate filed an estate return; its gross income and taxable estate did not include W's assets that the estate claimed had been disclaimed by H.

The IRS included the "disclaimed" amounts in the estate's gross estate, contending that H did not make a qualified disclaimer of W's property. The estate argued that H substantially complied with Sec. 2518, citing H's lists of property and his intent to disclaim W's property.

In a memorandum opinion, the Tax Court held for the Service, and, in an opinion designated as "Not for Publication," the Court of Appeals affirms.

The estate argues that a handwritten, unsigned schedule of assets and the probate inventory are qualified disclaimers. Neither document expresses an intention to disclaim. Both are simple lists of assets of a kind that could be used for any number of purposes. Neither expresses any other purpose than to list property, showing whether it was the property of W or of H.

Sec. 2518(b) defines a qualified disclaimer as "an irrevocable and unqualified refusal by a person to accept an interest in property but only if...[s]uch refusal is in writing." Moreover, Regs. Sec. 25.2518-2(b)(1) requires that the writing "identify the interest in property disclaimed and be signed either by the disclaimant or by the disclaimant's legal representative." There is no signed written instrument manifesting H's intent to disclaim his interest in W's property.

Such an instrument was drafted and remained in the lawyer's office unsigned. The unsigned and incomplete document bears no evidence that H ever saw it, much less that he placed on it any mark adopting it as his own act. Both the handwritten list of assets prepared by H in late 1992 and early 1993 and the inventory filed in the probate of W's estate contained no disclaimer language. On this record, there was no qualified written disclaimer signed by the recipient of the property.

Estate of Theodore J. Chamberlain, 9th Cir., 5/24/01, aff'g TC Memo 1999-181