Disclaimer Trust Attorney in Austin, TX

Disclaimer Trusts: Flexible Estate Tax Planning for Married Couples

Most married couples don’t know today whether they will owe estate tax when the second spouse dies. A disclaimer trust plan lets the surviving spouse make that decision later, with the tax law and asset values known at that time, instead of locking in a trust that may turn out to be unnecessary.

Reviewed by Turner Henington, attorney and former KPMG tax accountant, Texas Bar No. 24148206 · Updated November 2026

How a Disclaimer Works

A qualified disclaimer is treated as if the survivor never received the property, so it is not a gift by the survivor. To qualify under federal law (26 U.S.C. § 2518), the disclaimer must be:

• In writing and irrevocable, and delivered to the executor or trustee within nine months after the death;
• Made before the survivor accepts the disclaimed property or any of its benefits, such as income from it;
• Without direction by the survivor. The property must pass under the plan’s terms, not where the survivor chooses. A surviving spouse can still be a beneficiary of the trust that receives it.

Texas law on disclaimers is the Texas Uniform Disclaimer of Property Interests Act (Tex. Prop. Code ch. 240), which allows partial disclaimers by fraction, percentage or specific asset.

What the Survivor Can Keep

The surviving spouse can receive income and principal from the disclaimer trust for health, education, maintenance and support, and can often serve as trustee under that standard. The survivor generally cannot keep a power to decide who receives the trust after their death (Treas. Reg. § 25.2518-2(e)(2)), so the remainder beneficiaries, usually the children, are set in the plan.

Disclaimer Trust Compared With Other Options

Many plans combine these tools. A disclaimer plan works well when the couple trusts each other and wants simplicity. It is a poor fit for blended families, where a survivor might choose not to disclaim, or where the survivor is likely to need help managing assets.

Mistakes That Ruin a Disclaimer

• Accepting benefits first, such as depositing dividends from the account to be disclaimed or using the property.
• Missing the nine-month deadline. There are no extensions for the federal deadline.
• Forgetting portability. Even with a disclaimer, the executor may still want to file Form 706 to keep the deceased spouse’s unused exemption.
• Government benefits and creditor issues. A disclaimer can affect Medicaid eligibility and does not defeat a federal tax lien, so these need review before signing.

How We Help

We draft disclaimer provisions into revocable living trusts and wills, and after a death we advise the surviving spouse on whether and how much to disclaim, prepare the disclaimer, and coordinate the estate tax return with your CPA. See the Texas double step-up in basis for the income tax side of the decision.

Why Work With Us

• Tax background. Turner Henington is a former KPMG tax accountant, so we design trusts with both the estate tax and your family’s income tax in mind.
• We work with your CPA and advisor. Marital and bypass trust decisions often happen after a death, on the estate tax return, so we coordinate with the people who prepare it.
• Flat-fee quotes. After a free consultation, you get a written flat-fee quote before any work starts.
• We also handle the first death. Funding these trusts and making the elections is part of settling the estate, and we handle both the planning and the administration.

Talk to an Estate Tax Planning Attorney

Call (512) 737-8404, book a free consultation, or send us a message below.

What Our Clients Say

Disclaimer Trust FAQ

How long does a surviving spouse have to disclaim?

Nine months after the date of death for a qualified disclaimer under federal law, and the survivor must not accept the property or its benefits before disclaiming.

Can the surviving spouse benefit from the disclaimer trust?

Yes. The survivor can receive distributions for health, education, maintenance and support, but generally cannot keep a power to change who receives the trust after their death.

Is a disclaimer trust better than a bypass trust?

It is more flexible, because the survivor decides after the first death. A mandatory bypass trust is more certain and better protects children in blended families. The right choice depends on the family and the size of the estate.

Other Estate Tax Planning Tools

• Estate tax planning in Austin: overview
• Bypass (credit shelter) trust
• Marital trust
• QTIP trust
• Reverse QTIP election
• Spousal lifetime access trust (SLAT)
• Irrevocable life insurance trust (ILIT)
• Dynasty trust and GST planning
• Grantor retained annuity trust (GRAT)
• Charitable remainder and lead trusts
• Portability: keeping a deceased spouse’s unused exemption
• Lifetime gifting in Texas

This page is general information, not tax or legal advice for your situation. Reading it does not create an attorney-client relationship.