Hello
In dealing with an Intestate estate, we have received a disclaimer from a beneficiary which he has drafted himself. Although basic I believe it would be a valid disclaimer, and the signature has been witnessed by a Solicitor. It takes the form of an affidavit. It makes no mention of IHT/CGT.
Would it be advisable to draft a formal disclaimer at this point or would his document suffice? I am conscious that he may not have received any proper advice. We are still within the 2 years. I seem to recall that you cannot disclaim twice so the first one would be valid but would appreciate any input.
I am not sure you have any obligation towards the disclaiming beneficiary other than to ensure the disclaimer is effective. There is no particular form which the disclaimer must follow and indeed, whilst perhaps advisable, need not be executed as a deed.
There is no requirement for reference to IHT or CGT to be made in the document (re “writing back”) in the case of a disclaimer.
Once X has disclaimed a gift then X cannot disclaim the same gift a second time.
I would take comfort from the fact that the witness has described themselves as a solicitor.
To my mind, the question is not whether the disclaimer is a valid disclaimer (as a simple letter saying “I disclaim anything due to me from the deceased” would be valid), but whether it can be withdrawn.
If a disclaimer does not have the expected effect, the disclaimant may seek to withdraw it. I would therefore suggest that you might confirm to the disclaimant your understanding of the effect of the disclaimer and that the estate will be distributed on that basis. However, you should probably agree that course of action with the grant holder, as they are the responsible party for deciding upon the distribution of the estate.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Where the disclaimer is made by deed then withdrawal is not possible.
If not made by deed a withdrawal is possible assuming that no party has altered their position; otherwise no withdrawal is possible.
Case law support exists.
I’m not sure I agree with Paul that there is any requirement to explain the implications of the disclaimer to the disclaimant. Witnessing by a solicitor isn’t something from which I would draw extra comfort.
Malcolm Finney
A disclaimer made by deed binds the person making it like any other deed,15 and cannot therefore be withdrawn. Similarly, there may be no withdrawal of a disclaimer not made by deed which has been duly acted upon.16 However, it has been held that, as regards testamentary gifts, a disclaimer made other than by deed on which no one has changed his or her position may be withdrawn17 and that a refusal to accept the trust income under a will may be withdrawn for the future.
I would say that a deed is more than advisable because a disclaimer must be gratuitous, although this is expressed slightly differently in s93 IHTA (settled property) and s142(3). An instrument in writing is required by s142 but no form is prescribed by s93. This is curious because a disclaimer under hand would not prevent a person (with standing) from arguing that it was unenforceable in law. HMRC could surely not override the general law; and Equity will not assist a volunteer.
Theobald on Wills says that if a beneficiary renounces a benefit under a Will he can retract his renunciation at any time, provided no one has altered his position in reliance on the renunciation: Re Joel [1943] Ch. 311. This raises questions of whether equitable estoppel might apply. In general HMRC can object when a document is void in its effect but not when it is voidable, though it tends to stay out of any active dispute and await the outcome. A validly executed deed resolves these uncertainties.
It seems that a disclaimer relating to land might have to be by deed. LPA 1925 s205 includes a disclaimer in the definition of “conveyance” and s52 (1) makes any conveyance of land void to create or transfer a legal estate unless by deed (and registered land transfers e.g. by TR1 are executed as deeds: Sch 9 LRR 2003). There is no prohibition of the creation or transfer of equitable interests in land as long as writing is used: s53 (1) (a) LPA.
In relation to of the points I raised, to which Malcolm refers, I agree that it is no requirement to explain anything to the disclaimant. From experience, “home-made” disclaimers often have a different effect to that expected, and if the disclaimant realises that, then the issue might be resolved before any change in position arises and, therefore, before things get messy.
As regards having comfort with the witness escribing themselves as a solicitor, I believe that implies that the disclaimant is “advised”, whether the witness intends that to be the case or not. I recall there have been a number of cases where a professional has been found to have breached their professional duties even though merely helping out a friend or family member without any intention of creating a professional relationship.
With regard to a disclaimer by deed, that is an aspect I have always recommended, although interestingly, Williams, Mortimer & Sunnocks quotes a 2001 case – Smith v. Smith which apparently confirms that the ability to recall a disclaimer survives, even when the disclaimer is made under seal. Mindful that deeds used to be made under seal, l wonder if that case undermines the ability to safely rely upon a disclaimer by deed?
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals