Purpose of Disclaimers

The effect of a disclaimer is to pass the disclaimed interest as if the disclaimant had predeceased the decedent/trustor(s). E.g., the disclaimant's share would pass to the disclaimant's issue, if any. Disclaimers are irrevocable, per Probate Code Sec. 281. (See also, Estate of Cooke (1976) 57 Cal.App.3d 595, 598, discussing “Probate Code pertaining to disclaimer of testamentary and other interest ch. 11, div. 1, § 190 et seq.; hereafter ‘disclaimer statute’ and added section 13409; Stats. 1972, ch. 990, at 1805.)

Disclaimers and Inheritance Tax

By an urgency measure effective August 16, 1972, the Legislature added the new disclaimer statute (Prob. Code, Sec. 190 et seq.), repealed former section 13409, and added the new section 13409 (See 5 Witkin, Summary of Cal. Law, Taxation, § 218, at 4185-4186; 4 Pacific L.J. 246-248.) The new section (quoted fn. 1, ante) now provides that transfers of any interest in property "and all rights and powers relating to the same" which have been duly disclaimed pursuant to the provisions of chapter 11 of division 1 of the Probate Code or in any other valid manner, "shall be subject to the inheritance tax only if, and to the same extent and in the same manner as, the same would have been subject to such tax if such interest, rights and powers had been originally created in favor of and transferred to the same persons and in the same shares in which they are effectively distributed or otherwise disposed of, after giving full effect to such disclaimers..." (Estate of Cooke, 57 Cal.App.3d at 598.)

Following enactment of the new legislation the State Controller promulgated the following inheritance and gift tax regulation (Cal. Admin. Code, tit. 18, ch. 2.5, Sec. 13409(a)(2), effective May 13, 1973): "If a transferee under a will, an heir of an intestate or a transferee of an inter vivos transfer subject to inheritance tax disclaims any interest in the estate of the decedent or in the property transferred, in whole or in part, pursuant to the provisions of Chapter 11 (commencing with Section 190) of Division 1 of the Probate Code, and the date of death of the decedent is prior to August 16, 1972, the tax is nevertheless computed as though no disclaimer had been filed." (Estate of Cooke, 57 Cal.App.3d at 600.)

The 1972 Probate Code section 190 et seq. was enacted to modernize procedures for disclaiming interests in decedents' estates. At the same time Revenue and Taxation Code section 13409 was revised to permit avoidance of inheritance taxes by disclaimer in conformity with federal law. (Estate of Goshen (1985) 167 Cal.App.3d 97, 98, considering “whether an agreement to disclaim part of an estate as an integral part of a will contest settlement under which the disclaimant retains a benefit in the estate constitutes an acceptance within the meaning of Probate Code section 190.7 and operates to render Revenue and Taxation Code section 13409 inapplicable;” see also, Stats. 1972, ch. 990, Secs. 1-6, at 1805-1809; see 5 Witkin, Summary of Cal. Law (8th ed. 1974) Taxation, Sec. 218, at 4185-4186.) Probate Code section 190 et seq. was repealed in 1983 and a new disclaimer statute was enacted, Probate Code section 260 et seq. (Stats. 1983, ch. 17, §§ 1-5; see Witkin, Summary of Cal. Law (8th ed., 1984 supp. to vol. 7) Wills and Probate, § 38A, pp. 214-215.) The California Inheritance Tax Law, former Revenue and Taxation Code section 13301 et seq., was repealed in 1982. (Stats. 1982, ch. 1535, Sec. 14, at 5974; see Witkin, Summary of Cal. Law (8th ed., 1984 supp. to vol. 5) Taxation, Sec. 213A, at 687.)