To best enjoy this post, please be sure to first read A Family History of the Austens.
As a reminder about the Austen family, wife Juliet suffered a stroke upon learning the news of her husband’s death. She is alive but unresponsive. Her husband’s estate planner, Attorney Hume, advised their daughter Kate that a conservator is needed to execute a disclaimer on Juliet’s behalf. Attorney Hume’s goals were to have the disclaimed assets held in a trust for her benefit and to minimize estate taxes. The fact pattern indicates that her husband’s Will left all remaining assets – besides 96% membership in the business left to their three children – to Juliet with an option for her to disclaim the assets, leaving them to a trust for her benefit during her lifetime and, upon her death, distributed outright to their three children.
Attorney Hume is accurate that a disclaimer can be used in this situation. Specifically, a Conservator for a Single Transaction is an efficient way for Juliet to disclaim assets she otherwise would receive outright through her late husband’s estate. In this type of proceeding, rather than an ongoing conservatorship, a Conservator is appointed for a discrete purpose or transaction, such as signing a disclaimer. The Massachusetts Uniform Probate Code contemplated using a Conservator in a Single Transaction process for this disclaimer scenario, as evidenced by the comment to section 5-408 that states a single transaction “may be useful for execution of a disclaimer.”
The disclaimer still needs to be filed in the estate action within nine months of death, in accordance with section 2-801. This requires quick work to analyze whether to seek the Conservator for a Single Transaction, prepare and file that paperwork in a conservator proceeding, go through that court process to obtain the appointment and authorization, and then execute and file the disclaimer in the separate estate proceeding – all within nine months. Recently, we filed a Conservator for a Single Transaction with respect to a grandchild of the decedent, and the court required a guardian ad litem (GAL) to be appointed and to write a report before making the appointment. It is worth noting these extra steps in the conservator action because of the time involved and how quickly the nine-month deadline approaches without planning.
Also, Hume planned for this disclaimer in the Will, which was good planning on his part. Otherwise, if Juliet – through a Conservator for a Single Transaction – filed a disclaimer, the assets would pass to her and Jack’s three children. Instead, Attorney Hume likely set up a trust for Juliet to receive the assets, eliminating the need for an ongoing conservator for her.
This is a complex procedure that can have a significant impact on potential estate taxes and how assets are distributed. Please look for future posts discussing the mechanics, purpose, and usefulness of disclaimers in estate administrations.