Three Things You Need to Do When Your Spouse Dies and Their Will or Trust Has a Disclaimer Provision

Losing your spouse is one of the most difficult things you might face in life. Although it is important to take time to grieve, there are also some crucial steps you may need to take as soon as possible to address your spouse’s accounts and property and to secure your own future.

If your spouse’s will or trust, or your joint trust, has a disclaimer provision, one of the time-sensitive decisions you may face is whether to disclaim (refuse to accept) money or property that you would otherwise receive as a beneficiary.

State and federal law outline specific requirements for a disclaimer to be valid. According to Section 2518 of the Internal Revenue Code (I.R.C.), a qualified disclaimer is an irrevocable, unqualified refusal to accept a gift or inheritance. A properly executed disclaimer allows the property to pass to someone else, without it being considered a taxable gift from you to the next beneficiary in line.

There is also a special exception under Section 2518(b)(4) that allows a surviving spouse to still benefit from disclaimed assets, but taking advantage of this rule requires careful planning with an estate planning attorney.

A qualified disclaimer must meet the following requirements:

• It must be made in writing as required by state law.

• It must be made within nine months after your spouse’s date of death.

• You must not accept the property interest or its benefits. 

• The interest must pass to someone other than you without any direction by you (the person who is disclaiming the interest).

There are several steps you should take to ensure that you make timely decisions and properly disclaim a property interest if you choose to do so:

Step 1: Locate the estate planning documents. Your estate planning documents are one of the first sources of direction about what should happen next. Your spouse’s documents contain the roadmap that indicate what your spouse wanted to happen to their property and money, and they were likely designed in coordination with your own estate plan. A will or trust may include a provision specifying how particular property should be handled if the original beneficiary disclaims their interest in it. Your estate planning attorney will need to have those documents to advise you about the best course of action. 

Step 2: Meet with your estate planning attorney. The legal process that those who are left behind when someone dies is often complicated, and it is important to seek the help of your estate planning attorney. Because of the limited time during which you must elect to disclaim accounts and property, you will need to make an appointment with your attorney as soon as you can. Your attorney will review your spouse’s estate plan with you and help you determine if it contains disclaimer provisions, and if so, whether you should consider disclaiming your interest in a will or trust and the effect of such a disclaimer. 

Because of the unlimited marital deduction under federal tax law for US citizens, your spouse was permitted to transfer an unrestricted amount of accounts and property to you at any time during their life or at their death, free of taxes. However, the transferred amounts will usually be included in your estate. If you and your spouse had a large amount of wealth, using a disclaimer is one strategy for taking advantage of the lifetime estate tax exemption. 

Currently (2025), the federal estate tax exemption is $13.99 million per individual and $27.98 million for a married couple. This means only estates exceeding these amounts are subject to federal estate taxes. However, this historically high exemption is scheduled to be cut in half after December 31, 2025, unless Congress acts to change the law. Starting in 2026, the exemption is expected to drop to around $7 million per individual, adjusted for inflation—potentially subjecting many more estates to federal estate taxes.

In addition, some states impose their own estate or inheritance taxes at much lower exemption thresholds. If your estate may be subject to these taxes, disclaiming an inheritance might be a useful strategy—especially if the next beneficiary in line is less likely to be taxed or if the trust allows the property to pass into another trust that still benefits you without adding to your taxable estate.

Another key consideration is the portability election. After your spouse’s death, you can file a federal estate tax return and elect to transfer any unused portion of your spouse’s estate tax exemption (called the Deceased Spousal Unused Exclusion or DSUE) to yourself. For example, if your spouse’s gross estate was $5 million and did not qualify for the unlimited marital deduction, you could elect to use their remaining $8.99 million of exemption. Combined with your own $13.99 million, your estate would have an exemption total of $22.98 million in 2025. This may reduce or even eliminate the need for disclaiming unless you and your spouse have substantial combined wealth.

Because of the complexity and time-sensitive nature of these decisions, it’s highly recommended to speak with an experienced estate planning attorney. They can help you decide whether a disclaimer is a wise choice in your situation and guide you in minimizing tax exposure while still meeting your family's financial needs and goals.

Step 3: Include financial and tax professionals in the conversation. In addition to your attorney, involve your financial advisor, accountant, and other financial or tax professionals in the conversation. This team of professionals will help you determine the value of the accounts and property you will inherit from your spouse, as well as the value of your own estate, to determine if a portability election will provide adequate protection or if disclaiming some of the accounts and property in your spouse’s estate or held in trust for your benefit is the better strategy. They will help you consider all the important variables, including the impact of a disclaimer on your family members: Will they have to pay estate tax at your death if you do not disclaim your interest in the trust? Or will the beneficiary who receives the inheritance after a disclaimer be negatively impacted, for example, by increased income taxes if they receive trust income that pushes them into a higher tax bracket?

We Are Here to Help

Disclaiming your interest in a will or trust is a strategy that you may not have considered, but it may be a great way for you to achieve your estate planning and tax savings goals. We can help you evaluate your unique circumstances to determine whether a disclaimer will benefit you and your loved ones, as well as assist you in meeting any looming deadlines and avoiding possible pitfalls.

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