In administering an estate there are various options available to and decisions that need to be made by the executors or beneficiaries. This is to inform you of one of those options or decisions which you must consider, which is your opportunity or possibility as a beneficiary to make a total or partial disclaimer under the Will of the decedent or from the estate of the decedent. For probate and estate tax purposes, if a person disclaims an interest under a Will or from an estate in accordance with federal and state law, then that person who disclaimed is treated as if he or she had predeceased the decedent. The result of such a total or partial disclaimer by a beneficiary of the estate would be to have that property disclaimed pass not to the beneficiary (or the beneficiary's estate) but instead to the alternate takers of the estate as provided in the Will.

"Disclaimer", "refusal" or "renunciation" may be used interchangeably. A disclaimer is elective with the disclaimant or the person who might make the disclaimer. Once a decision is made to disclaim, the actual disclaimer procedure is not difficult and generally can be easily handled.

By definition, a disclaimer is the refusal to accept a benefit conferred by Will or by operation of law. Conceivably an alternate taker could in turn disclaim, and generally that property would pass to that person's children. Current tax laws allow avoidance of all federal estate, gift and income taxes where an effective disclaimer has been executed in a timely manner. Since the person making a disclaimer is said never to have received the property, no transfer is made when the disclaimer is executed, and thus no tax is payable. After a death, a disclaimer can be executed to reduce the prospective estate and inheritance tax liability of the disclaimant's estate and also to shift income from the disclaimant to another person or persons. In some instances a disclaimer may generate generation-skipping transfer (GST) tax. Therefore, before a disclaimer were executed a very careful determination must be made that no GST would be due because of a disclaimer and that the disclaimed property will pass to the desired person or persons.

A disclaimer may be total or partial. A partial disclaimer can be used very effectively where an individual wishes to receive certain benefits from an estate but is willing to give up certain other benefits from the estate. For example purposes, you might accept all cash and securities and you might disclaim all real estate and other mineral and royalty property from the estate or vice versa. Or, as another example, you might accept one-half of all property passing to you and refuse the other one-half. The possibilities are virtually endless.

To achieve the desired result of having property pass to a secondary beneficiary and of having no adverse gift, estate or income tax on the transfer, a "qualified disclaimer" must occur. To have a qualified disclaimer, the disclaimer must be irrevocable, unqualified, in writing, signed and delivered within nine months of the death of the decedent and satisfy several other technical restrictions. Also, the disclaimant must not have accepted any benefits from the property. As you can see, the principal requirements are that any disclaimer must be accomplished within nine months of the date of death, must be in writing and the disclaimant must not have accepted any benefits from the property.

As discussed above, once a decision is made to disclaim an interest in property, that decision is irrevocable. Thus, it may be a very difficult decision whether or not to disclaim an interest under the Will or from the estate. EACH OF YOU MUST SEEK SPECIFIC INDEPENDENT LEGAL ADVICE WITH YOUR OWN INDIVIDUAL LEGAL AND TAX ADVISER TO DISCUSS THE ADVANTAGES, DISADVANTAGES AND CONSEQUENCES IN MAKING OR NOT MAKING SUCH A PARTIAL OR TOTAL DISCLAIMER. I am representing and advising only the personal representative of this estate, and I am not representing nor advising any of you individually nor personally. The purpose of this letter is to alert and inform you of this opportunity for a disclaimer, and this letter is not intended to give and does not give you specific legal advice. YOU MUST SEEK INDEPENDENT LEGAL ADVICE WITH RESPECT TO A POSSIBLE DISCLAIMER, IF YOU HAVE AN INTEREST IN SUCH A COURSE OF ACTION.

To enable us to have adequate time to prepare the required death tax returns and to administer the estate, a decision will need to be made by you concerning a possible disclaimer as soon as reasonably possible. As soon as you make your decision, please let me know.

If you have any questions on this, please feel free to contact me.