Nebraska Probate Form 390 - Renunciation Under Nebraska Probate Code § 30-2352 And Irc §§ 2518 And 2

FULL NAME OF FORM: Renunciation Under Nebraska Probate Code § 30-2352 And Irc §§ 2518 And 2046

WHEN TO USE THE FORM: The form included herein for the preparation of a Renunciation under Nebraska Probate Code § 30-2352 is intended to comprise a format in which a renunciation could be cast and provide a checklist of those elements which must be included to constitute a valid renunciation. Such a renunciation is made available under Nebraska Probate Code § 30-2352 to allow a person otherwise succeeding to property, or having rights perfected in property, by transfer from a Decedent to renounce that right and avoid succeeding to such property interest. The resulting legal effect under Nebraska Probate Code § 30-2352(c) is that the property interest renounced passes as if the person renouncing had predeceased the Decedent; and the renunciation relates back for all purposes to the date of death of Decedent. Due to the potentially unique nature of each renunciation, independent research should always be completed and Form 390 utilized only if acceptable for the situation.

HOW TO USE THE FORM: A renunciation must be signed and acknowledged by the person renouncing in the manner provided for the execution of deeds to real estate. It must be filed within nine (9) months after the later of the date on which the transfer creating the interest in such person is made or the date on which such person attains age twenty-one (21). The renunciation is to be filed in the County Court where the proceedings concerning the Decedent's estate are pending or would be pending if commenced. If the interest renounced is one in real estate, the renunciation must be recorded in the office of the Register of Deeds in the county in which the real estate lies. A copy of the writing must be mailed to the Personal Representative of the estate, the Trustee of any trust in which the interest renouncing exists or to any other person having legal title to or possession of the property in which the interest renounced exists. Evidence of such mailing should be filed with the Court.

WHEN NOT TO USE THE FORM: A renunciation may be "in whole or in part, or with reference to specific parts, fractional shares or assets." It is, however, an absolute termination of the renouncing party's interest in the subject matter described in the document of renunciation as being that renounced. As is also the case in the election by a spouse of an elective share, or the waiver of such election, it should only be entered into with the greatest of care and the most thoughtful contemplation of the consequences, which are irrevocable, assuming an otherwise valid execution of the renunciation.

COMMENTS:

1. Renunciation of a trust power is possible, and is dealt with separately under the 600 Series of this System.
2. Under Nebraska Probate Code § 30-2352 renunciation by a surviving joint tenant is possible, at least as to the interest or contributions of the Decedent succeeded to. Such interest will vary as between real and personal property and types of personal property. The statute is generally designed to cover all ways in which any interest in property can arise or result by reason of the death of a Decedent.
3. If the renunciation is intended to affect the impact of the Federal Estate Tax (such as increasing or reducing the amount of marital deduction), the requirements of IRC § 2518 should be carefully reviewed. To be valid for Federal tax purposes, the renunciation must meet the requirements of federal law. Note the following aspects of IRC § 2518:
   1. Applies only to gift and estate tax, not to income tax consequences.
   2. Requirement that the disclaimer by a "person" makes disclaimer by a Conservator questionable, although the period for disclaimer is postponed until nine (9) months after a minor reaches age twenty-one (21).
   3. The Federal disclaimer must be "irrevocable and unqualified."
   4. The renunciation must be made not later than nine (9) months after the date on which the transfer renounced takes place (except as to minors, above).
   5. The property must pass either to the surviving spouse of the Decedent or to a person "other than the person making the disclaimer." This allows a surviving spouse to disclaim but receive the benefits of the disclaimed property or interest by virtue of being a beneficiary of a trust receiving the disclaimed property.
   6. Disclaimer of an "undivided portion" of an interest is expressly allowed.
   7. Other uses of renunciation:
   8. Reduce an over funded marital deduction devise. This may be particularly beneficial when the unlimited marital deduction would result in over-funding.
   9. Preserve the exempt status of grandfathered generation skipping transfers.
   10. Passage of property to an estate tax charitable deduction.
   11. To increase the marital deduction by disclaimer from other takers.
   12. To skip a generation with the disclaimed property passing to the issue of the disclaiming person.

PRECAUTIONS: In the execution of renunciations or any other irrevocable election to be made by an heir or devisee under the Nebraska Probate Code, great care should be taken that the renouncing or electing party be fully informed and aware of the consequences of the action taken. Some of the factors which must be taken into account by the attorney advising a party executing such an instrument are as follows:

1. The mental ability, perception and competency of the disclaiming or electing person.
2. The conflicting interests involved and the necessity for separate counsel to advise the disclaiming or electing party.
3. Complete disclosure of the nature, extent, and value of the property interest being renounced or elected as to.
4. Full knowledge of the state law effect of the renunciation or election.
5. Full discussion of the effect on federal and state death tax liability.
6. Any representations made by the Personal Representative.
7. Any representations made by or influence attempted by other interested parties benefiting from the renunciation or election.
8. Stability of the renouncing or electing party and possibility of second thoughts after execution of the document.

The attorney might consider such methods as seem appropriate under the circumstances for the protection of the attorney, and the client represented (presumably the Personal Representative), through exchange of letters or other written statements with the renouncing party, examination of the renouncing party in the presence of an independent Notary or other independent witness, or examination of the renouncing or electing party in open Court with a record being made.

SUGGESTED FORMAT FOR RENUNCIATION UNDER NEBRASKA PROBATE CODE: § 30-2352 and IRC §§ 2518 and 2046

1. If the estate of the Decedent is under administration in Nebraska, the renunciation should begin with the County Court caption.
2. A recitation should be made of the date of death of the Decedent.
3. A statement of the relationship of the disclaiming person to the property in which the Decedent had an interest is necessary, and may be any of the following:
   1. heir
   2. devisee
   3. person succeeding to a renounced interest
   4. donee
   5. beneficiary under a testamentary or non-testamentary disposition
   6. donee of a power of appointment
   7. grantee
   8. surviving joint owner or surviving joint tenant
   9. beneficiary of an insurance contract
   10. person designated to take pursuant to a power of appointment exercised by a testamentary or non-testamentary instrument
   11. recipient of any benefit otherwise under a testamentary or non-testamentary instrument. The Trustee under a testamentary or non-testamentary instrument may, upon the direction of the appropriate court, renounce or deviate from certain powers, and this is separately treated under Series 600 of this System.
4. A statement of renunciation, together with a description of the property and the exact interest therein being renounced, whether total or partial, is necessary.
5. A renunciation is not effective under either state or federal law if any dominion over the renounced property has been asserted by the disclaiming person or if any benefit has been received. Consideration should be given to inclusion of such a representation.
6. The renunciation should be dated, signed by the renouncing person, and acknowledged in the same manner required for the execution of deeds.