Disclaimers for consideration
03 January 2020
In my last number of mails I talked about disclaimers. I mentioned that it is possible to disclaim in favour of a third party, but that is treated like a gift. A way around this, is preparing a disclaimer for consideration. This is an important tool both in intestacy and testate situations. I came across this recently in an intestacy situation.
So in my case, Sean Murphy a bachelor farmer, died owning a farm worth €500,000 and 2000 publicly quoted shares worth €350,000. He was survived by his five siblings, Mary, Stephen, Patrick, Carmel and Tony. It was agreed that Stephen would take the farm. Mary, Patrick, Carmel and Tony all disclaimed their interest in the estate in consideration of payment to them of the benefit of one quarter of the shares. Stephen disclaims in consideration of the agricultural assets. As a result, Stephen obtains the farm but not the shares. The shares are treated as an inheritance from the original deceased – in this case Sean. There is a sting in the tail of this arrangement which many practitioners may not be aware. A disclaimer for consideration attracts stamp duty. So you need to factor that into your planning.
However, disclaimers for consideration are something you should look into.