what is a qualified disclaimer 
a qualified disclaimer is a refusal to accept property that meets the provisions set forth in the internal revenue code irc tax reform act of 1976 allowing for the property or interest in property to be treated as an entity that has never been received section 2518 of the irc permits a beneficiary of an estate or trust to make a qualified disclaimer so that it is as though the beneficiary never received the property for tax purposes 1 understanding the qualified disclaimersometimes the costs of receiving a gift may be greater than the benefits of the gift as a result of tax implications in these cases refusing the gift may be the tax efficient thing to do the disclaim of any gift or bequest is known as a qualified disclaimer for federal income tax purposes the internal revenue service irs defines a qualified disclaimer as an irrevocable and unqualified refusal by a person to accept an interest in property 2 qualified disclaimers are used to avoid federal estate tax and gift tax and to create legal inter generational transfers which avoid taxation provided they meet the following set of requirements only if these four requirements are met can the disclaimant be treated as if they never received the gift in the first place the disclaimed property is then passed to the contingent beneficiary by default that is to a party other than the original stated beneficiary of the gift or bequest basically the property passes to the contingent beneficiary without any tax consequence to the person disclaiming the property provided the disclaimer is qualified under federal tax law if an individual makes a qualified disclaimer with respect to an interest in property the disclaimed interest is treated as if the interest had never been transferred to that person for gift estate and generational skipping transfer gst tax purposes thus a person that makes a qualified disclaimer will not incur transfer tax consequences because they are disregarded for transfer tax purposes the federal law does not treat the disclaimant as if they had predeceased the decedent this is contrary to many states disclaimer laws in which disclaimed property interests are transferred as if the disclaimant had predeceased the donor or decedent 3 qualified disclaimer regulations and estate planningdue to the strict regulations that determine whether disclaimers are considered qualified according to the standards of the irc it is essential that the renouncing party understand the risk involved in disclaiming property in most cases the tax consequences of receiving property fall far short of the value of the property itself it is usually more beneficial to accept the property pay the taxes on it and then sell the property instead of disclaiming interest in it if a disclaimer does not meet the four requirements listed above then it is a non qualified disclaimer in this case the disclaimant rather than the decedent is treated as having transferred the interest in the property to the contingent beneficiary additionally the disclaimant is treated as the transferor for gift tax purposes and will need to apply the gift tax rules to determine whether a taxable gift was made to the contingent beneficiary 4 