I Don’t Need the Money From My Father, and I’d Like to Pass it to My Children Instead, Without Any Adverse Tax Consequences. Is That When a Disclaimer Might be Used?

Yes. A qualified disclaimer could be the perfect tool to accomplish this goal.  If you disclaim your interest in the inheritance after your father is deceased, but before you accept any benefit from the inheritance, the inheritance will pass as though you predeceased your father.  In that case we would look to the terms of your father’s estate plan to determine who would be the beneficiary or beneficiaries to receive the disclaimed portion of that inheritance.

If the document provides that should you predecease your father your share of the inheritance is to be distributed to your children equally, then your children would receive the assets you disclaimed. Since you made the qualified disclaimer, you will not be deemed to have made a gift to your children and thus you won’t suffer any adverse tax consequences. Plus, those disclaimed   assets will not be included in your estate at your death, thus avoiding additional estate taxes. However, there may be generation-skipping transfer taxes due from your father’s estate if the amount transferred to your children exceeds your father’s generation-skipping transfer tax exemption as discussed in Chapter 4.