Relates to the renunciation of property interests

Title of bill

An act to amend the estates, powers and trusts law, the general obligations law and the mental hygiene law, in relation to the renunciation of property interests

Purpose

This bill has been proposed to revise certain provisions of Section 2-1.11 of the Estates, Powers and Trusts Law pertaining to the renunciation of property interests to make New York practice in this area more consistent with federal tax law.

Summary of provisions

Amends EPTL Sec. 2-1.11 pertaining to the procedures to be followed when an individual seeks to renounce an interest in property whether created by will or testamentary or intervivos trust to make it easier for practitioners to comply with its mandates and applicable federal tax law. Included in the provisions of this bill are the following:

A) Relocates warning that a renunciation made in compliance with this section of the EPTL may not qualify as a timely disclaimer for federal tax purposes;

B) Provides that dispositions in trust take effect, as with federal gifts, on the date the transfer became irrevocable, rather than on the date of the trust agreement;

C) Provides that a surviving joint tenant could disclaim a survivorship interest in property regardless of such survivor's contribution and consistent with federal rule;.

Existing law

Estates, Powers and Trusts Law Section 2-1.11 governs the rights of beneficiaries in New York to renounce their interests in property.

Justification

This bill revises certain provisions of Section 2-1.11 of the Estates, Powers and Trusts Law to improve the ability of practitioners to meet its requirements and those of the federal tax disclaimer act found in Internal Revenue Code section 2518. It is of some concern that practitioners have thought that compliance with the New York State renunciation statute meant compliance with the federal tax disclaimer statute. Unfortunately that is not always the case.

One thing accomplished by this legislation is to place the compliance warning at the beginning of the statute, where it could not be overlooked. Parties seeking to renounce are clearly warned that compliance with the provisions of the New York renunciation statute will not be sufficient in all cases to qualify as a disclaimer for federal tax purposes. The proposed legislation also attempts to resolve certain inconsistencies between the two statutes with a goal of making it easier to comply under both statutes. In addition this bill makes some technical corrections to accommodate certain new changes in New York law which allow for guardians appointed under Art. 81 of the Mental Hygiene Law to make renunciations on behalf of an incapacitated person.

Legislative history

2006: S.7486; 2007-08: S.2879

Fiscal implications

None.

Effective date

On the first day of January next succeeding the date on which it shall become a law.