QUESTION

Is a testamentary trust beneficiary predeceasing testator treated like a surviving beneficiary disclaiming interest?

Asked on May 23rd, 2013 on Estate Planning - Ohio
More details to this question:
Example 5(a) given in the Uniform Probate Code under SECTION 2-1106 DISCLAIMER OF INTEREST IN PROPERTY reads as follows: "Father’s will creates a testamentary trust to pay income to his son S for his life, and on his death to pay the remainder to S’s descendants then living, by representation. If S disclaims his life income interest in the trust, he will be deemed to have died immediately before Father’s death. The disclaimed interest, S’s income interest, came into possession and enjoyment at Father’s death as would any present interest created by will and, therefore, the time of distribution is Father’s death. If the income beneficiary of a testamentary trust does not survive the testator, the income interest is not created and the next interest in the trust takes effect. Since the next interest in Father’s trust is the remainder in S’s descendants, the trust property will pass to S’s descendants who survive Father by representation. It is immaterial under the statute that the actual situation at S’s death might be different with different descendants entitled to the remainder." My question concerns the stated rule that remainder beneficiaries of a testamentary trust inherit when the income beneficiary does not survive the testator. Absent any other considerations (e.g., anti-lapse), does this rule apply to testamentary trusts in general or is it specific to this context of disclaimed interest?
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7 ANSWERS

Probate Attorney serving Roseville, CA
Partner at James Law Group
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Sound like a law school question. If this is a real will/trust, take it to an attorney for analysis. The will/trust needs to be read as a whole to determine if this clause is relevant.
Answered on May 27th, 2013 at 7:31 PM

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Business Planning Attorney serving Livonia, MI at Frederick & Frederick Attorneys at Law
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I think that your analysis is correct, and I would think that the same thing would be true regardless of planning tool. In other words, the result would be the same for a revocable trust, a Will or testamentary trust. A disclaimer creates the legal fiction that the disclaiming party predeceased the decedent, and the assets then pass to the "next in line."
Answered on May 24th, 2013 at 1:24 AM

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Trusts Attorney serving Sacramento, CA at Law Office of Victor Waid
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You are advised to seek the opinion of an estate planning lawyer, and be prepared to pay for an opinion letter; the implication of what you are asking, is there is a lot of money or assets at stake. An ounce of prevention is worth a pound of cure. Even though I am an estate planning lawyer, I would need to see the documents and have time to research your question to provide a letter opinion, as would any other lawyer in this area of the law.
Answered on May 24th, 2013 at 1:24 AM

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Estate Planning Attorney serving Wilmington, DE at Reger Rizzo & Darnall, LLP
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It sounds as though if s predecessors father it passed to s's descendants.
Answered on May 24th, 2013 at 1:23 AM

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Probate Attorney serving Las Vegas, NV
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Nevada is not a UPC state. Thus a UPC rule does not apply. The terms of the Will on the issue would apply.
Answered on May 24th, 2013 at 1:23 AM

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Commercial Contracts Attorney serving Boise, ID at Peters Law, PLLC
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Reread the comment. It talks about the income beneficiary dying. Your answer is in there.
Answered on May 24th, 2013 at 1:22 AM

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What is important is not the rule, but the language of the trust. Notice that Father's will specifies in the testamentary trust the income of the trust is to be distributed to the son for his life, and on his death to pay the remainder of the trust to his descendants. If the will specified that the testamentary trust would be distributed to Ohio State University in Columbus, Ohio, the descendant's would receive nothing upon the death of son (or upon son's disclaimer). Does that answer your question?
Answered on May 24th, 2013 at 1:22 AM

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