Disclaimer: A Species of Refusal

A Discussion of Colorado’s Uniform Disclaimer of Property Interests Act

Gordon J. WilliamsGordon J. Williams, P.C.

320 E. CostillaColorado Springs, CO 80903

(719) 471-9300gordlaw@aol.com

The following were compiled by a sub-sub internet librarian while searching e-classics for historicaldisclaimers. He found these references, and, ignorant that many of the meanings are not the sameas our statute’s, he emailed them to me. I present them to you in no particular order. Our sub-sub’sdiligence otherwise would have been ignored. Admittedly, you will ignore it, although you mightgive it a glance. Nevertheless, our sub-sub will continue his lonely online search. Poor grub-wormof a sub-sub, my heart goes out to you! But take courage! E-Heaven awaits your final upload withan open-armed interface!

Here I disclaim all my paternal care.William Shakespeare, King Lear

Full well thou knowest, Jarl, that these things aretrue; and I am bound to say it, to disclaim anylurking desire to reap advantage from thy greatgood nature. Herman Melville, Mardi

Miss Bennet eagerly disclaimed all extraordinarymerit, and threw back the praise on her sister'swarm affection. Jane Austen, Pride and Prejudice

Then I love thee, because thou art a woman, anddisclaim'st flinty mankind.William Shakespeare, Timon of Athens

Elizabeth had scarcely time to disclaim all right tothe compliment. Jane Austen, Pride and Prejudice

We are a little of the spaniel kind; though so oftenspurned, still to fawn argues a meanness of spirit,that, as an individual, I disclaim, and would ratherendure any hardship than submit to it. AbigailAdams, Letter to John Adams, December 10, 1775

The very cruelty and heartlessness of mypunishment, however, made every one who heardthe story vehement in censuring it, so that thosewho had a hand therein were soon eager todisclaim all responsibility, shouldering the blame

on others. Peter Abelard, Historia Calamitatum

Pale trembling coward, there I throw my gage,disclaiming here the kindred of the king.William Shakespeare, Richard II

Or is it this: To go into foul water when it is thewater of truth, and not disclaim cold frogs and hottoads? Friedrich Nietzsche, Thus SpakeZarathustra: A Book For All And None

He is your own scholar, and I disclaim him. HenryFielding, The History of Tom Jones, a Foundling

You cowardly rascal, nature disclaims in thee; atailor made thee. William Shakespeare, King Lear

Among them towers the Poet Laureate, to whomperhaps Higgins may owe his Miltonicsympathies, though here again I must disclaim allportraiture. George Bernard Shaw, Pygmalion

I made an effort, therefore, to remedy the evil, anddisclaim all personal application of the remark bya hasty, ill-expressed reply. Anne Bronte, AgnesGrey

Let my disclaiming from a purpos’d evil free meWilliam Shakespeare, Hamlet, Prince of Denmark

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This was Scraps, the awkward youngNewfoundland puppy, who was the property of noone, unless of the schooner Mary Turner herself,for no man, fore or aft, claimed ownership, whileevery man disclaimed having brought him onboard. Jack London, Michael, Brother of Jerry

I am not about to disclaim matrimony, like a sillygirl, who dreams of nothing else from morn tillnight; but I am a nun here, without the vow ofcelibacy. James Fenimore Cooper, The Pioneers

Must these have voices, that can yield them nowand straight disclaim their tongues?William Shakespeare, Coriolanus

Ambrose would have been the first to disclaimany influence, or indeed any belief that toinfluence was within her power.Virginia Woolf, The Voyage Out

Scrooge reverently disclaimed all intention tooffend or any knowledge of having wilfullybonneted the Spirit at any period of his life. Hethen made bold to inquire what business broughthim there. Charles Dickens, A Christmas Carol

Mr. Beebe disclaimed placing the Garden of Edenanywhere. E.M. Forster, A Room With A View

I have disclaim'd Sir Robert and my land.William Shakespeare, The Life and Death of KingJohn

He knew something of the advantages of travel,too, having been frequently in Boston, and once,it was thought, in New York, though he modestlydisclaimed that glittering distinction.Ambrose Bierce, Can Such Things Be?

The natives, generally, disclaimed the outrage,and brought the shattered remains of the boat andthe dead body of the seaman to the ship.Washington Irving, Astoria or Anecdotes of anenterprise beyond the Rocky Mountains

Those who remarked in the physiognomy of thePrince a dissolute audacity, mingled with extremehaughtiness and indifference to, the feelings of

others could not yet deny to his countenance thatsort of comeliness which belongs to an open set offeatures, well formed by nature, modelled by artto the usual rules of courtesy, yet so far frank andhonest, that they seemed as if they disclaimed toconceal the natural workings of the soul.Sir Walter Scott, Ivanhoe

The idea of Hetty had just crossed Mr. Irwine'smind as he looked inquiringly at Arthur, but hisdisclaiming indifferent answer confirmed thethought which had quickly followed–that therecould be nothing serious in that direction.George Eliot, Adam Bede

I bowed to, and disclaimed, the compliment. "Inearly met you, once, in Philadelphia, someBrowning affair or other–you were to lecture, youknow. My train was four hours late.Jack London, The Sea Wolf

How to make the disclaimer convincing enough iswhat bothers me. Joseph Conrad, The Secret Agent

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The Uniform Disclaimer of Property Interests Act (hereinafter, the “UDPIA”), C.R.S. § 15-11-1201,et seq., was enacted in Colorado effective August 10, 2011. As of October 2011, the UDPIA hasbeen enacted in 18 states, the District of Columbia, and the Virgin Islands, and it is being considered1

in Minnesota. The UDPIA replaces Colorado’s former Disclaimer Act, the now-repealed C.R.S.2

§ 15-11-801, and it provides numerous changes to Colorado’s statutory disclaimer law, most of3

which are clarifications, some of which are substantive. Changes include specific procedures as tohow disclaimers are made effective and irrevocable, how and to whom they are delivered, underwhat conditions disclaimers must be recorded, how and when they are barred, and to whomdisclaimed interests and powers pass. Perhaps the most substantial change is the removal of the timedeadline in which a disclaimer must be made. Whereas Colorado’s former disclaimer statute, C.R.S.4

§ 15-11-801, required that a disclaimer be made within a certain time, for example, 9 months froma decedent’s death, the UDPIA has no time limit. Rather, under the UDPIA, a disclaimer may be5

limited or barred, depending on the disclaimant’s action or inaction with respect to the disclaimedinterest. However, unless the disclaimer is intended to be a qualified disclaimer under 26 U.S.C. §2518 for federal tax purposes, no time limit applies.

The UDPIA does not change Colorado law with regard to disclaimers being refusals to acceptinterests or powers. A disclaimer is not a transfer, assignment, or release, and a person whodisclaims is treated as having refused the interest or power (with regard to previously exercisedpowers, the refusal pertains to future exercises of the power), and thus the disclaimant neveraccepted or received the interest or power. See, e.g., Matter of Estate of Colacci, 37 Colo. App. 369,549 P.2d 1096 (1976)(construing § 153-5-43, which preceded C.R.S. § 15-11-801); C.R.S. § 15-11-801 (Colorado’s former disclaimer statute). This having been said, Colacci, supra, and other casesthat involve disclaimers are not included in the annotations in the Lexis-Nexis soft-bound “red

Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Hawaii, Indiana, Iowa,1

Maryland, Massachusetts, Minnesota, Nevada, New Mexico, North Dakota, Oregon, U.S. VirginIslands, Virginia, West Virginia

Minnesota H.F. 11-15732

A copy of C.R.S. § 15-11-801 is included in Exhibit 1.3

The UDPIA is a state law, and, although the UDPIA does not impose a time4

deadline in which to disclaim an interest or power, a deadline is imposed at thefederal level for qualified disclaimers. See 26 U.S.C. § 2518(b)(2) (generaldeadline is the later of 9 months after the interest is made to the person or, if theinterest is made prior to a person turning 21, then 9 months after the person turns21). Consequently, and as discussed in Sections II and IV, infra, Federal law mustbe reviewed when advising a client to disclaim.

See C.R.S. § 15-11-801(2) to determine what deadlines apply for interests created5

more than 9 months prior to August 10, 2011 (the date of enactment of theUDPIA in Colorado. With regard to interests created within 9 months of August10, 2011, a disclaimer under the UDPIA may be made. Please refer to thediscussion of C.R.S. § 15-11-1216 in Section XIII, infra.

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book.” This is an oversight. As of the date of the presentation on these materials, editors have beencontacted and a request has been made to include the UDPIA’s annotations in 2012.

This outline is presented and the UDPIA is discussed, in the order of each section (disclaimers ofpowers of appointment are categorized for convenience, but the statues are discussed in theirnumeric order). Rather than discussing categorical issues, such as gift and estate taxes, creditorissues, and Medicaid, each UDPIA statute is presented in full and then discussed. Specific issuesare woven into the discussions of the sections.

Disclaimer Examples are included in Exhibit 2.

I. Title. 15-11-1201. “This part 12 shall be known and may be cited as the ‘UniformDisclaimer of Property Interests Act’”. Being uniform, other states’ laws may be referred to forguidance.

II. Definitions. The UDPIA is definition driven, and the definitions must be the starting point. They must be carefully reviewed and paid attention to, or errors will plague the advice given toclients. Appropriately, the UDPIA begins with definitions, which are found in C.R.S. § 15-11-1202,and which are as follows:

15-11-1202. Definitions. As used in this part 12, unless the context otherwiserequires:(1) "Disclaimant" means the person to whom a disclaimed interest or power wouldhave passed if the disclaimer had not been made.(2) "Disclaimed interest" means the interest that would have passed to thedisclaimant if the disclaimer had not been made.(3) "Disclaimer" means the refusal to accept an interest in or power over property.(4) "Fiduciary" means a personal representative, trustee, agent acting under a powerof attorney, or other person authorized to act as a fiduciary with respect to theproperty of another person.(5) "Jointly held property" means property held in the name of two or more personsunder an arrangement in which all holders have concurrent interests and under whichthe last surviving holder is entitled to the whole of the property.(6) "Person" means an individual; corporation; business trust; estate; trust;partnership; limited liability company; association; joint venture; government;governmental subdivision, agency, or instrumentality; public corporation; or anyother legal or commercial entity.(7) "State" means a state of the United States, the District of Columbia, Puerto Rico,the United States Virgin Islands, or any territory or insular possession subject to thejurisdiction of the United States. The term includes an Indian tribe or band or anAlaskan native village recognized by federal law or formally acknowledged by astate.(8) "Trust" means:(a) An express trust, charitable or noncharitable, with additions thereto, wheneverand however created; and(b) A trust created pursuant to a statute, judgment, or decree that requires the trust

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to be administered in the manner of an express trust.

There are three fundamental definitions in the UDPIA: “disclaimer,” disclaimed interest,” and“disclaimant.” A disclaimer is the refusal to accept an interest in or power over property. This isdeceptively simple: A disclaimer is a refusal. However, while every disclaimer is a refusal, notevery refusal is a disclaimer. So, disclaimers fall into the category of refusal – a subset of refusal.– just as every square is a rectangle, but not every rectangle is a square, every disclaimer is a refusal,but not every refusal is a disclaimer. The difference is important when discussing inter vivos gifts. A refusal destroys the gift, but a disclaimer may result in the gift passing to someone else. As isdiscussed in Section V regarding to whom disclaimed interests pass (C.R.S. § 15-11-1206(2)(c)(IV)),a disclaimer does not stop the disclaimed interest in property from being transferred to a person otherthan the disclaimant – tritely put, it does not stop the gift from giving. So, whereas when a personrefuses an inter vivos gift, the refusal results in there being no gift given (because an inter vivos giftrequires an acceptance), an argument can be made that a disclaimer does not destroy the act ofgifting, but it instead sends the gift to another person who accepts it, or if all other possible takersdisclaim, the gift will escheat to the state.

The two other fundamental definitions, of “disclaimed interest” and “disclaimant,” are self-explanatory. Note that a “disclaimant” is a “person,” which is defined in C.R.S. § 15-11-1202(6). This includes an estate and a trust, but does not include a personal representative or a trustee. However, the definition of “fiduciary” in § 15-11-1202(4) includes a personal representative and atrustee within the purview of “person.” Consequently, trustees and personal representatives maydisclaim in such a manner that is consistent with their fiduciary obligations.

There are two more definitions that should be discussed before continuing. The first is the definitionof “time of distribution” in § 15-11-1206(1)(c), which means “the time when a disclaimed interestwould have taken effect in possession or enjoyment.” Although § 15-11-1206(1) provides that thisterm is defined for the purposes of § 15-11-1206, in context, the definition is applicable throughoutthe UDPIA. The second is the definition of a “qualified disclaimer” in 26 U.S.C. § 2518(b) whichdefines a qualified disclaimer as

an irrevocable and unqualified refusal by a person to accept an interest in propertybut only if (1) such refusal is in writing, (2) such writing is received by the transferorof the interest, his legal representative, or the holder of the legal title to the propertyto which the interest relates not later than the date which is 9 months after the laterof (A) the day on which the transfer creating the interest in such person is made, or(B) the day on which such person attains age 21, (3) such person has not accepted theinterest or any of its benefits, and (4) as a result of such refusal, the interest passeswithout any direction on the part of the person making the disclaimer and passeseither (A) to the spouse of the decedent, or (B) to a person other than the personmaking the disclaimer.6

So, 26 U.S.C. § 2518 must be consulted to determine the exact deadline for the qualified disclaimer

A copy of 26 U.S.C. § 2518 is included in Exhibit 3.6

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based on the facts of the particular case. Because the UDPIA does not limit the time in which aperson may disclaim, a qualified disclaimer cannot be made if the applicable deadline imposed by26 U.S.C. § 2518 has passed. Therefore, although a disclaimer may be a valid disclaimer under theUDPIA, it will not be a qualified disclaimer for purposes of Federal estate and gift taxes. Adisclaimer that is valid under the UDPIA, but which is not a qualified disclaimer is treated as atransfer, the result being the imposition of substantial transfer taxes. Consequently, Federal law mustnot be ignored when considering whether a disclaimer should be made.

Lastly, from time to time in this discussion the word “taker” is used to refer to the person to whoma disclaimed interest or power passes. Also, the UDPIA refers to a “holder” of a power ofappointment. A “holder” of a power under the UDPIA is the same as a “donee” of a power ofappointment as defined in C.R.S. § 15-2-102(4).

III. The UDPIA’s Scope and the Effect of Other Law on the Udpia.

A. Scope – “This part 12 applies to disclaimers of any interest in or power over property,whenever created.” C.R.S. § 15-11-1203. The UDPIA’s scope is broad, and it governs disclaimersthat are created at any time. How can that be, given that the UDPIA was made effective as of August10, 2011? What is meant by the UDPIA applying to disclaimers “whenever created[,]” and whatabout disclaimers created prior to August 10, 2011? The UDPIA is a prospective statute, but,because, for the most part, it does not change the distribution of an interest in property as set forthin Colorado’s now-repealed disclaimer law, C.R.S. § 15-11-801, disclaimers made prior to August10, 2011 pursuant to C.R.S. § 15-11-801 are controlled by § 15-11-801. Likewise, disclaimers thatare barred or limited before August 10, 2011 pursuant to § 15-11-801 are not affected by theUDPIA. However, the UDPIA may be referred to in order to determine how disclaimed interests7

pass if § 15-11-801 provides no guidance. Case law, although scant in Colorado, also should be8

consulted. It is important that the distinction be made between a disclaimer made prior to August10, 2011, and the ability to disclaim interests in or powers over property that existed prior to August10, 2011 and which were not time barred pursuant to § 15-11-801(2) as of August 10, 2011. Pursuant to § 15-11-1216, if an interest in or power over property existed prior to August 10, 2011,and if the deadline to disclaim the interest or power has not passed on August 10, 2011, then adisclaimer of the interest or power made after August 10, 2011 may be made under the UDPIA. 9

This raises the issue as to the deadline by which a person must disclaim. Colorado’s formerdisclaimer law, § 15-11-801 established a general 9-month deadline to create a disclaimer after the

See § C.R.S. § 15-11-1213(5)(A disclaimer is barred or limited if so provided by7

law other than this part 12. This is discussed in Section X, infra.

C.R.S. § 15-11-801 does not address powers over property. Releases of powers8

are addressed in C.R.S. § 15-2-201, et seq. Repeal of § 15-2-201, et seq. wasdiscussed in committee, because a disclaimer has the effect of a release, but § 15-2-201 was not repealed.

Section XIII, infra, discusses § 15-11-1216.9

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time of distribution, subject to the circumstances surrounding the interest to be disclaimed. There10

is no time limit in the UDPIA. Conceivably, a person may disclaim decades after the time ofdistribution. This is discussed further in Section XIII of this outline.

B. Effect of Other Law.

15-11-1204. (1) Unless displaced by a provision of this part 12, the principles of lawand equity supplement this part 12.(2) This part 12 does not limit any right of a person to waive, release, disclaim, orrenounce an interest in or power over property under a law other than this part 12.

Although the UDPIA provides clear guidance on many aspects of disclaimers, clarity is notexhaustive. For example, the UDPIA does not address whether an inter vivos gift to a trust that isdisclaimed by the trustee is destroyed or instead passes to another person. Another example mayrequire invoking the equitable principal of latches: A person who disclaims years after learning ofthe interest may be estopped from disclaiming due to the length of time that has passed, the type ofproperty interest, and other facts of the matter. In such cases, case law and equitable doctrines mustbe consulted.

The UDPIA does not limit a person’s right to waive, release, disclaim, or renounce under other law. So, a disclaimer may be made under 26 U.S.C. § 2518, for transfer tax purposes, a power may bereleased pursuant to C.R.S. § 15-2-201, et seq., and waivers and refusals may be made undercommon law. This provision, while seeming rather simple, is logically included in the UDPIA,because a disclaimer under the UDPIA is not a release, waiver, or renunciation, but it could beconfused for one. Consequently, statutes must be drafted such that less confusion may arise. Disclaimers are a type of refusal that results in the transfer or gift continuing rather than beingdestroyed. Waivers, releases, renunciations, and refusals may result in destruction of a gift, unlessgoverning provisions in an instrument provide otherwise. The contrary is the case with disclaimers,for when a disclaimer is created, the transfer is not destroyed unless provisions governing the transferprovides that for destruction (e.g., lapse).

IV. Power to Disclaim, Requirements, Effectiveness, and When a Disclaimer becomesIrrevocable

15-11-1205. Power to disclaim - general requirements - when irrevocable.(1) A person may disclaim, in whole or in part, any interest in or power overproperty, including a power of appointment. A person may disclaim the interest orpower even if its creator imposed a spendthrift provision or similar restriction ontransfer or a restriction or limitation on the right to disclaim.(2) Except to the extent a fiduciary's right to disclaim is expressly restricted orlimited by another statute of this state or by the instrument creating the fiduciary

Section 15-11-801(2) provides a 9-month deadline from the time of distribution,10

but it also includes different deadlines based upon when a party learns of theproperty interest. See Exhibit 1.

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relationship, a fiduciary may disclaim, in whole or in part, any interest in or powerover property, including a power of appointment, whether acting in a personal orrepresentative capacity. A fiduciary may disclaim the interest or power even if itscreator imposed a spendthrift provision or similar restriction on transfer or arestriction or limitation on the right to disclaim, or if an instrument other than theinstrument that created the fiduciary relationship imposed a restriction or limitationon the right to disclaim.(3) To be effective, a disclaimer shall be in writing or other record, declare thedisclaimer, describe the interest or power disclaimed, be signed by the person makingthe disclaimer, and be delivered or filed, and, with regard to an interest in realproperty, be recorded in the manner provided for in section 15-11-1212. In thissubsection (3), "record" means information that is inscribed on a tangible medium orthat is stored in an electronic or other medium and is retrievable in perceivable form.(4) A partial disclaimer may be expressed as a fraction, percentage, monetaryamount, term of years, limitation of a power, or any other interest or estate in theproperty.(5) A disclaimer becomes irrevocable when it is delivered or filed and, withregard to an interest in real property, recorded pursuant to section 15-11-1212, orwhen it becomes effective as provided for in sections 15-11-1206 through 15-11-1211, whichever occurs later.(6) A disclaimer made pursuant to this part 12 is not a transfer, assignment, orrelease.(7) No person obligated to distribute an interest disclaimed under this part 12shall be liable to any person for distributing the interest as if the interest were notdisclaimed unless the person obligated to distribute the interest receives a copy of thedisclaimer prior to distributing the interest.

A. Power to Disclaim. §§ 15-11-1205(1) & (2). A person who is not a fiduciary may disclaiman interest or power, even if the creator of the interest or power “imposed a spendthrift provision orsimilar restriction on transfer or a restriction or limitation on the right to disclaim.” C.R.S. § 15-11-1205(1). This is not a change of law, but rather a codification, the rationale being that no person mayforce someone to accept a gift. Thus, a spendthrift may disclaim his interest in a spendthrift trust,despite a restrictive provision that prohibits disclaimer. Trust drafters must consider this whendrafting spendthrift provisions, the danger being that a failure of a devise may occur due to adisclaimer, resulting in an interest passing according to intestate succession, with the spendthriftbeneficiary receiving an intestate share free of trust.

A fiduciary (agent under power of attorney, trustee, personal representative, or other fiduciary) mayalso disclaim an interest or power, but fiduciaries may disclaim only to the extent that their “rightto disclaim is expressly restricted or limited by another statute of this state or by the instrumentcreating the fiduciary relationship.” Thus, a fiduciary may not disclaim if the fiduciary is prohibitedfrom doing so. With regard to trustees and personal representatives, the trust or will must prohibitdisclaiming. If the documents do not prohibit disclaiming, then fiduciary law must be consulted. Note that a disclaimer by a fiduciary, although authorized under the UDPIA, could be a breach offiduciary duty, depending upon the circumstances. For example, a trustee who disclaims substantialcash may be liable to the trust beneficiaries – certainly so if trustee is a taker by reason of the

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disclaimer. However, a trustee who disclaims polluted property could be acting appropriately.

Conservators may disclaim an interest or power pursuant to C.R.S. § 15-14-411(1)(b), which requiresprior court approval. So, a conservator risks a breach of fiduciary duty by disclaiming without aprior court order authorizing disclaimer. However, what if a conservator is faced with a deadlineto create a qualified disclaimer, and there is inadequate time to obtain an order? The choices are todisclaim and hope forgiveness follows, or to seek an emergency or forthwith order. If thousands ofdollars of taxes are on the line, the better option may be to file an emergency request, then, if thecourt has not issued its order, disclaim after obtaining an opinion from counsel, if one can beprocured.

Agents under powers of attorney are prohibited from disclaiming unless specific authority isprovided in the power of attorney. C.R.S. § 15-14-724(1)(h). A disclaimer is considered a “hotpower,” which requires specific authority from the principal fr an agent to disclaim.

B. Effectiveness. § 15-11-1205(3). In order for the disclaimer to be effective, a person mustsatisfy the procedural requirements of § 15-11-1205(3). A disclaimer is effective, if

I. is in writing or other record.ii. it declares that it is a disclaimeriii. it describes the interest or power disclaimediv. it is signed by the person making the disclaimerv. it is delivered or filed pursuant to § 15-11-1212, andvi. if it pertains to an interest in real property in which the disclamant has a

record interest, it is recorded pursuant to § 15-11-1212.

1. No time limit to create a disclaimer under the UDPIA. Note that there is no timelimit in which to create a disclaimer. As discussed in Section II, a disclaimer createdpursuant to the UDPIA is a disclaimer under state law. However, if a client requires aqualified disclaimer to be created for gift or estate tax purposes, then Federal law,specifically, 26 U.S.C. § 2518, must be followed. If a qualified disclaimer is required, andif the deadline of 26 U.S.C. § 2518 is not adhered to, a qualified disclaimer will not becreated. Although the disclaimer may be valid under the UDPIA, it will be treated as atransfer under Federal law for estate or gift taxes. This could result in substantial taxes beinglevied on the disclaimant.

2. Recording of disclaimers of real property. Disclaimers that pertain to real propertyin which the disclaimant has a record interest are not effective unless they are recorded. Pursuant to C.R.S. § 15-11-1212(15) a disclaimer of an interest in real property in which thedisclaimant has a record interest must be recorded in the county in which the real estate islocated. An acknowledgment by a notary, which was required by former § 15-11-11

801(3)(iii), is not required under the UDPIA, although best practices would dictate thatacknowledging the disclaimant’s signature is the prudent course, and this author strongly

See section IX, infra, which discusses § 15-11-1212(15).11

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recommends it. Although this section requires that a disclaimer be filed in accordance with12

§ 15-11-1212 in order for it to be effective, § 15-11-1215 provides that, if a disclaimer thatis required to be filed is instead not filed, it will be valid as between the disclaimant and theperson who takes the interest by reason of the disclaimer, but it will not be effective as tothird parties. Consequently, an interest whose disclaimer does not satisfy the filingrequirement of § 15-11-1212 will still pass to the taker, but for third parties, the interest maybe considered as still owned by the transferor. For example, if a creditor of the disclaimantseeks to levy on an interest subject to an unfiled disclaimer, then the disclaimer would havebeen ineffective as to the disclaimant’s creditor. The creditor could levy on the interest. Ifa taker intends to protect the interest from the disclaimant’s creditor, the disclaimer must befiled prior to a judicial sale of the interest. C.R.S. § 15-11-1213(2)(c).

The creditor will enjoy the same result with an unrecorded disclaimer of real property in which thedisclaimant has a recorded interest, but not because the disclaimer is ineffective as to third parties. Rather, the disclaimer itself is invalid pursuant to § 15-11-1215, which states that a disclaimer “isnot valid as between any persons until a copy of the disclaimer is recorded” pursuant to § 15-11-1212(15). Consequently, if the taker wants to protect the interest, the disclaimer must be recorded13

prior to a judicial sale of the real property.

C. Partial Disclaimer. § 15-11-1205(4). A person need not disclaim an entire interest. If apartial disclaimer is sought, the disclaimer must state the “fraction, percentage, monetary amount,term of years, limitation of a power, or any other interest or estate in the property” sought to bedisclaimed. The recording requirement still applies if the disclaimant has a record interest in real

Failure to have a disclaimer of an interest in real property notarized can result in12

future problems or delays by reason of C.R.S. § 38-35-106(1) & (2), which state,“(1) Any written instrument required or permitted to be acknowledged affectingtitle to real property, whether acknowledged, unacknowledged, or defectivelyacknowledged, after being recorded in the office of the county clerk and recorderof the county where the real property is situate, shall be notice to all persons orclasses of persons claiming any interest in said property. (2) Any unacknowledgedor defectively acknowledged instrument which has remained of record for aperiod of ten years in such office shall be deemed to have been properlyacknowledged. This section shall apply to all recorded instruments.” Consequently, an unacknowledged disclaimer of real property puts the public onnotice that a person has disclaimed and another is claiming an interest in theproperty, but the unacknowledged disclaimer must be of record for 10 yearsbefore it is deemed to have been properly acknowledged. A notarization is notdifficult to obtain. Best practices, therefore, dictate that recorded disclaimers beacknowledged by a notary.

There is a typographical error in C.R.S. § 15-11-1215. The last words of this13

section read, “a copy of the disclaimer is recorded in section 15-11-1212(14).” Itshould read, “a copy of the disclaimer is recorded in section 15-11-1212(14).” This will be corrected in the next legislative session.

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estate that is to be disclaimed.

D. Irrevocability. § 15-11-1205(5). Pursuant to 26 U.S.C. § 2518(b), a qualified disclaimer as“an irrevocable and unqualified refusal” to accept an interest. Accordingly, for a disclaimer createdunder state law to be a qualified disclaimer under Federal law, a mechanism of irrevocability mustbe included in the UDPIA. Additionally, if a disclaimer is not irrevocable, then disclaimants andtakers could collude to disclaim contingently: – Takers who have creditors hounding them, couldconspire with the disclaimant to revoke the disclaimer, and the taker would not have had an interestin the property. This would result in uncertainty, especially with real property. Interestingly, adisclaimant and a taker may, nevertheless collude to create an intentionally defective and thereforerevocable disclaimer if the disclaimant and the taker are concerned about the disclaimant’s or thetaker’s creditors. A disclaimer could be made irrevocable or could be revoked prior to a judicialsale, depending upon whether the disclaimant or the taker has creditors. This is discussed furtherin Section XII.

E. No Transfer, Assignment, Release. § 15-11-1205(6). A disclaimer made under the UDPIAis not a transfer, assignment, or release of an interest or power, the interest or power is not vestedin the taker, and a disclaimer will defeat creditors. This is the cornerstone of disclaimers, and is14

not a change in the law, but is a codification and a continuation of it, for “at common law the rightto disclaim . . . at the expense of one's creditors [is] generally recognized. Matter of Estate ofColacci, 37 Colo. App. 369, 372, 549 P.2d 1096, 1099 (1976)(citing People v. Flanagin, 331 Ill.203, 162 N.E. 851 (1928)). The rationale behind this is that a person may not be forced to accept agift, and his or her “motive in refusing is not open to investigation.” Flanagin, 331 Ill. at 212, 162N.E. at 851. The fact that a disclaimers is a refusal, or a rejection, of an interest or power, is anindicator that disclaimed gifts, devises, bequests, or transfers without consideration are not propertyinterests owned by the takers. Because the disclaimed interest is not vested in the taker, a disclaimerwill defeat creditors’ claims. Colacci, supra; but see, supra note 15 (pursuant to federal law,disclaimers will not defeat federal tax liens). So, creditors’ claims are defeated, because thedisclaimant never owned the interest. Therefore, he or she never made a transfer without

But see, Drye v. United States, 528 U.S. 49 (1999)(federal tax lien statute, 2614

U.S.C. § 6321, will defeat a disclaimer of an interest in property, because “statelaw is inoperative to prevent the attachment of liens created by federal statute infavor of the United States” once it is determined that state law has created aproperty interest that satisfies the requirements of federal tax lien provisions). See, also, 26 U.S.C. § 6334 (setting forth exemptions to levy). Pursuant to Drye,supra, and 26 U.S.C. § 6321, devises, bequests, beneficiary designated propertyare rights to property that can be levied upon for satisfaction of tax liens , anddisclaimers will not defeat the liens. Note that, according to Drye, a refused intervivos gift is not a right to property in the refusee, and is not subject to federal taxlien levy. 528 U.S at 60. The Drye court did not address the issue as to whetherthe federal tax lien statute defeated the entire disclaimer or just that portion of thedisclaimer equal in value to the tax lien. Consequently, if faced with the Dryeproblem, ague that he disclaimer is limited to the value of the lien, rather thanbarred entirely.

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consideration. Of course, if the disclaimed interest were deemed to have been owned by the15

disclaimant, creditors could avail themselves of fraudulent transfers acts and be able to attach thedisclaimed interest. See, e.g., Kalt v. Youngworth, 16 Cal.2d 807, 811 (Cal. 1940)(a disclaimer mustbe regarded as a fraudulent conveyance under the fraudulent transfers act if the disclaimer isdeemed to be a transfer). Consequently, a disclaimer created under the UDPIA must be created withcare, or it will be regarded as a transfer, the result being exposure to substantial taxes and creditorattachments to the disclaimed interest.

F. No Liability Without Delivery. § 15-11-1205(7). A person who controls an interest is notliable for a distribution of a disclaimed interest to a someone other than the taker unless the personwho controls the interest has received a copy of the disclaimer. This protective provision, which isnot part of the uniform statute, was included to ensure that persons who control a disclaimed interestwithout knowledge of the disclaimer will not be liable for making an improper distribution, unlessthe person had received a copy of the disclaimer prior to distributing the interest. For example, Anamed B as beneficiary, with contingent beneficiary C, on his pay-on-death designation on a largebank account at Bank X. Before A dies, B disclaims the account, and delivers the disclaimer to A,who puts the disclaimer in his drawer. On October 31, 2011, A dies, having never given thedisclaimer to the Bank X. B goes to the bank and claims the account. C later finds the disclaimer. Bank X is not liable for the distribution, although the disclaimer is effective pursuant to §§ 15-11-1205(3) & 15-11-1212(6). C’s remedies are against B, and include fraud, conversion, andconstructive trust causes of action.

V. When a Disclaimer is Effective; Where Property Passes

15-11-1206. Disclaimer of interest in property.(1) As used in this section, unless the context otherwise requires:

(a) "Future interest" means an interest that takes effect in possession orenjoyment, if at all, later than the time of its creation.(b) "Method of representation" includes any method of division described insection 15-11-709.(c) "Time of distribution" means the time when a disclaimed interest wouldhave taken effect in possession or enjoyment.

(2) Except for a disclaimer governed by section 15-11-1207 or 15-11-1208, thefollowing rules apply to a disclaimer of an interest in property:

(a) The disclaimer takes effect as of the time the instrument creating theinterest becomes irrevocable, or, if the interest arose under the law ofintestate succession, as of the time of the intestate's death.(b) The disclaimed interest passes according to any provision in the

Disclaimers, although not defeated, are treated as transfers without consideration15

for purposes of qualification for medical benefits under 42 U.S.C. § 1396, et seq.,C.R.S. § 25.5-4-302, and 10 CCR 2505-10 § 8.100E & F. A disclaimer will resultin the recipient being deemed to have transferred the value of the disclaimedinterest or power. This could result in disqualification, depending on the valuedisclaimed. This is discussed further in Section X.

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instrument creating the interest, providing for the disposition of the interest,should it be disclaimed, or of disclaimed interests in general.(c) If the instrument does not contain a provision described in paragraph (b)of this subsection (2), the following rules apply:

(I) If the disclaimant is not an individual, the disclaimed interestpasses as if the disclaimant had ceased to exist immediately beforethe time of distribution.(II) If the disclaimant is an individual, except as otherwise providedfor in subparagraphs (III) and (IV) of this paragraph (c), thedisclaimed interest passes as if the disclaimant had died immediatelybefore the time of distribution.(III) If, by law or under the instrument, the descendants of thedisclaimant would share in the disclaimed interest by any method ofrepresentation had the disclaimant died immediately before the timeof distribution, the disclaimed interest passes only to the descendantsof the disclaimant who survive the time of distribution.(IV) (A) If the disclaimed interest would pass as part of thedisclaimant's estate had the disclaimant died immediately before thetime of distribution, the disclaimed interest instead passes as if byrepresentation to the descendants of the disclaimant who are living atthe time of distribution.

(B) If the disclaimed interest would pass as part of thedisclaimant's estate had the disclaimant died immediately before thetime of distribution and no descendant of the disclaimant survives thetime of distribution, the disclaimed interest passes to those persons,including the state to which such interest would escheat, butexcluding the disclaimant, and in such shares as such persons wouldsucceed to the transferor's intestate estate under the applicable lawhad the transferor died at the time of distribution. However, forpurposes of this sub-subparagraph (B), if the transferor's survivingspouse is living but remarried at the time of distribution, thetransferor is deemed to have died unmarried at the time ofdistribution.

(C) As used in sub-subparagraph (B) of this subparagraph(IV), "applicable law" refers to the intestate succession law of thetransferor's domicile with respect to a disclaimer of an interest inpersonal property and refers to the intestate succession law of thisstate with respect to a disclaimed interest that is real property locatedin this state.

(D) In addition to other applications of this sub-subparagraph(D) that are apparent, the general assembly declares its intent to havethe rules of this sub-subparagraph (D) apply with respect to presentinterests in real property and personal property that are transferredoutright or in trust to an individual by a transferor during the lifetimeof the transferor where the interest disclaimed would, if notdisclaimed, have vested in the individual to whom the property is

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transferred and would be part of that individual's estate if he or shehad died immediately after the transfer. Accordingly, this sub-subparagraph (D) shall be so construed to determine the dispositionof the present interest. For purposes of the application of the rules tosuch present interests, the reference to "immediately before the timeof distribution" in sub-subparagraphs (A) and (B) of thissubparagraph (IV) shall instead be considered as references to"immediately after the time of distribution".

(E) In sub-subparagraph (D) of this subparagraph (IV),"present interest" means an interest that takes effect in possession orenjoyment, if at all, at the time of its creation.

(d) Upon the disclaimer of a preceding interest, a future interest held by aperson other than the disclaimant takes effect as if the disclaimant had diedor ceased to exist immediately before the time of distribution, but a futureinterest held by the disclaimant is not accelerated in possession or enjoyment.

A. Definitions. § 15-11-1206(1). "Future interest," "Method of representation," and"Time ofdistribution" are defined for this section. Note that the methods of distribution are those listed inC.R.S. § 15-11-709, namely, per capita at each generation, per stirpes, and by representation.

B. When a Disclaimer Takes Effect. § 15-11-1206(2)(a). A disclaimer’s effectiveness isdetermined by C.R.S. § 15-11-1205(3). The time a disclaimer takes effect is set forth in § 15-11-1206(2), which provides that the disclaimer takes effect when the instrument that created the interestbecomes irrevocable or, if an interest arose under the laws of intestacy, at the intestate’s time ofdeath.

1. An “instrument that created the interest” includes a will, a trust, any instrument thatincludes a beneficiary designation, and any other instrument that creates an interest. Thedisclaimer, whenever made, will take effect when the instrument becomes irrevocable. Inthe case of a valid will, the time is the testator’s death. In the case of a trust, the time isdetermined by the type of trust and the trust’s provisions. An inter vivos trust may becomeirrevocable at the settlor’s death, but may provide for an earlier date. An irrevocable trustis irrevocable on the date of creation or as may otherwise be set forth in its provisions. Abeneficiary designation in a life insurance policy will be irrevocable upon the insured’sdeath. A pay on death designation on an account or a transfer on death designation onsecurities will become irrevocable on the account or security owner’s death.2. A disclaimer of an interest that arises under the laws of intestacy, C.R.S. §§ 15-11-101, et seq. & 15-12-101, is effective at the time of the intestate’s death.

C. How Disclaimed Interests Pass. § 15-11-1206(2)(b) &(c).

1. Disclaimer of an interest arising under the law of intestate succession. Except fordisclaimers of jointly held interest (C.R.S. § 15-11-1207) and disclaimers made by trusteesof interest in property that otherwise would become trust property (C.R.S. § 15-11-1208), adisclaimer of an interest in property that arises under the laws of intestate succession takeseffect at the time of the intestate’s death. This is a straightforward, simple rule.2. Disclaimer of an interest created by an instrument. Except for disclaimers of rightsof survivorship in jointly held property (C.R.S. § 15-11-1207) and disclaimers made by

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trustees of interests in property that otherwise would become trust property (C.R.S. § 15-11-1208), disclaimers of interests created by instruments take effect as provided in theinstrument. The general rule is set forth in § 15-11-1206(2)(b), which provides that adisclaimed interest passes (I) according to any provision that creates the interest that providesfor the disposition of the interest, if it is disclaimed, or (ii) according to any provisionregarding disclaimed interests in general. However, pursuant to § 15-11-1206(2)(c), if theinstrument does not provide a dispositive provision for disclaimed interests, then

a. if the disclaimant is not an individual, the interest “passes as if thedisclaimant ceased to exist immediately before the time of distribution.” § 15-11-1206(b)(2)(c)(I).b. if the disclaimant is an individual, then pursuant to § 15-11-1206(b)(2)(c)(II),the interest “passes as if the disclaimant had died immediately before the time ofdistribution” unless

(1) “[i]f, by law or under the instrument, the descendants of thedisclaimant would share in the disclaimed interest by any method ofrepresentation had the disclaimant died immediately before the time ofdistribution, the disclaimed interest passes only to the descendants of thedisclaimant who survive the time of distribution.” § 15-11-1206(2)(c)(III). This section solves the problem that arises if a disclaimed interest or portionthereof is to pass to disclaimant’s descendants by any method ofrepresentation. By providing a definite time at which takers are identified,the distribution can be easily calculated among the takers. The statute is notclear as to whether the takers are all surviving descendants who survive thetime of distribution, or are the descendants who are determined, according tothe method of representation, at the time of distribution. The more logicalinterpretation would be the latter.(2) “[i]f the disclaimed interest would pass as part of the disclaimant'sestate had the disclaimant died immediately before the time of distribution,the disclaimed interest instead passes as if by representation to thedescendants of the disclaimant who are living at the time of distribution.” §15-11-1206(2)(c)(IV)(A). This section also determines a time at whichdescendants are determined, but it forces distribution by representation,which is defined in C.R.S. § 15-11-709(5). This section is clearer that thedescendants are determined, by representation, at the time of distribution.(3) “[i]f the disclaimed interest would pass as part of the disclaimant'sestate had the disclaimant died immediately before the time of distributionand no descendant of the disclaimant survives the time of distribution, thedisclaimed interest passes to those persons, including the state to which suchinterest would escheat, but excluding the disclaimant, and in such shares assuch persons would succeed to the transferor's intestate estate under theapplicable law had the transferor died at the time of distribution. However,for purposes of this [§ 15-11-1206(2)(c)(IV)(B)], if the transferor's survivingspouse is living but remarried at the time of distribution, the transferor isdeemed to have died unmarried at the time of distribution.” § 15-11-1206(2)(c)(IV)(B). This section provides a time to determine takers, and italso provides that the disclaimant’s spouse will not take, because the

15

disclaimant is deemed to have died unmarried. Note that, pursuant to § 15-11-1206(2)(c)(IV)(C), the term “applicable law” referred to in this sub-subsection means the intestate succession law of the transferor’s domicileregarding personal property, and to Colorado intestate succession law withregard to real property located in Colorado. This is consistent with commonlaw regarding the choice of law that controls disposition of the decedent’sreal property and personal property. See, e.g., Blatt v. Blatt, 79 Colo. 57, 66-67, 243 P.1099, 1102-03 (1926)(the law of the decedent’s estate controls thedisposition of the decedent’s personal property, and the law of the state thatis the situs of the decedent’s real property controls the disposition of the realproperty).(4) In the case of present interests, which term is defined pursuant to §15-11-1206(2)(C)(IV)(E) as “an interest that takes effect in possession orenjoyment, if at all, at the time of its creation[,]” and to determine thedisposition of a present interest, the phrase, “immediately before the time ofdistribution” in § 15-11-1206(2)(c)(IV)(A) & (B) is read, immediately afterthe time of distribution.” This ensures that the disclaimed interest willremain in the disclaimant’s estate and will pass subject to § 15-11-1206(2)(c)(IV).

c. When a preceding interest is disclaimed, “a future interest held by a personother than the disclaimant takes effect as if the disclaimant had died or ceased to existimmediately before the time of distribution, but a future interest held by thedisclaimant is not accelerated in possession or enjoyment.” This ensures that adisclaimant may not accelerate a future interest by reason of the disclaimer.

VI. Disclaimer of Rights of Survivorship in Jointly Held Property.

15-11-1207. Disclaimer of rights of survivorship in jointly held property.(1) Upon the death of a holder of jointly held property, a surviving holder maydisclaim, in whole or in part, the incremental portion of the jointly held propertydevolving to the surviving holder by right of survivorship.(2) A disclaimer pursuant to subsection (1) of this section takes effect as of the deathof the holder of jointly held property to whose death the disclaimer relates.(3) In the event of a disclaimer pursuant to subsection (1) of this section with onlyone holder surviving the death of the holder to whose death the disclaimer relates, theincremental portion disclaimed shall, as a consequence of the disclaimer, pass as partof the estate of the deceased holder.(4) In the event of a disclaimer pursuant to subsection (1) of this section with twoor more of the holders surviving the death of the holder to whose death the disclaimerrelates:

(a) The disclaimer does not sever the joint tenancy with respect to the jointlyheld property as among the surviving holders;(b) The incremental portion disclaimed shall, as a consequence of adisclaimer, devolve to the surviving holders in proportion to their respectiveinterests in the jointly held property excluding the disclaimant and any othersurviving holder who disclaims to the extent of his or her disclaimer of the

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incremental portion;(c) An incremental portion devolving to a surviving holder, as a consequenceof one or more disclaimers, may be disclaimed by the surviving holder;(d) To the extent that all of the surviving holders disclaim an incrementalportion devolving to them, the portion shall instead pass as part of the estateof the deceased holder; and(e) The proportion of each of the surviving holders with respect to the jointlyheld property shall be adjusted to take into account the devolution of theincremental portion to the extent that the portion is disclaimed.

A. Survivorship Interests May Be Disclaimed. § 15-11-1207(1). The ability to disclaimsurvivorship interests is not new to Colorado. Colorado’s former disclaimer statute, C.R.S. § 15-11-801(2)(c) provided for disclaimer of survivorship interests, as did Federal law, 26 U.S.C. § 2518. However, there was confusion as to whom the interests passed and whether the joint interests weresevered by reason of the disclaimer. The UDPIA provides resolution.

B. When Disclaimer of Survivorship Interest Takes Effect. § 15-11-1207(2). Simply put, adisclaimer of a survivorship interest “takes effect as of the death of the holder of jointly held propertyto whose death the disclaimer relates.” § 15-11-1207(2)

C. Disposition of the Interest Disclaimed by the last Surviving Holder. § 15-11-1207(3). Whenthe last surviving holder disclaims the survivorship interest that would have passed to him had henot disclaimed, the disclaimed interest passes “as part of the estate of the deceased holder.” § 15-11-1207(3). The interest will pass by intestate succession or by will.

D. How Survivorship Interests Pass When More Than One Joint Tenants Survive. § 15-11-1207(4). The UDPIA answers the important question that former § 15-11-801(2)(c) did not answer,namely, how does the disclaimed interests pass when more than one surviving joint tenant survivesthe holder whose share was disclaimed?

1. Joint tenancy is not severed as between the surviving holders. § 15-11-1207(4)(a). Therefore, unless a surviving joint holder takes action to sever the joint tenancy, thesurvivorship quality of the jointly held property continues.2. The surviving holders will take a share “in proportion to their respective interests inthe jointly held property excluding the disclaimant and any other surviving holder whodisclaims to the extent of his or her disclaimer of the incremental portion[.]” § 15-11-1207(4)(b). The may result in unequal joint tenancies among the surviving holders. However, in Colorado, unequal joint tenancies are allowed. § 38-31-101(6)(a).3. Surviving holders may disclaim the interests devolving to them by reason of adisclaimer. § 15-11-1207(4)(c).4. If a disclaimed survivorship interest is disclaimed by all surviving holders, thedisclaimed survivorship interest passes “as part of the estate of the deceased holder[.]” § 15-11-1207(4)(d).5. The resulting joint interests are adjusted according to the disclaimed portion receivedby the respective holders. Thus, with a little math, the joint interests are calculated and eachholder own the percentage calculated by reason of the disclaimer.

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VII. Disclaimer of an Interest by a Trustee.

A. Interests Disclaimed by Trustee are not Trust Property. § 15-11-1208. “If a trustee disclaimsan interest in property that otherwise would have become trust property, the interest does not becometrust property.” This, however, begs the question, what happens to the disclaimed interest? If theinterest is created by an instrument, then the instrument must be reviewed for alternate distributions,if any. In the case of an inter vivos gift, the UDPIA is silent. For example, A, the owner ofBlackacre, wants to give Blackacre to the B Trust. A records a deed to Blackacre transferringBlackacre to the B Trust. C, the trustee of the B Trust, disclaims the interest. What result? If adisclaimer is considered a refusal, then no gift has occurred, because a completed gift requires anacceptance. Blackacre remains A’s property, and the deed is void. If, however, because a disclaimerdoes not destroy a gift, but deflects a gift, thus passing it to another person, the gift must continueuntil it is accepted or it is refused in a manner other than by disclaimer. If the latter is the case, theUDPIA does not provide guidance. An impractical argument could be made that the gift is treatedas if A has died, and it passes by intestate succession. If the gift was made from A’s revocable livingtrust, and if the gift is not destroyed, but passes as if A has died, then the provisions of the livingtrust will control. This is problematic.

VIII. Disclaimers of Powers of Appointment and Other Powers

A. An Overview of Powers of Appointment1. Definitions.

a. “Power of Appointment.” Powers of appointment are defined in C.R.S. § 15-2-102(1) as follows:[A]ny power other than a power held in a fiduciary capacity created or reserved byany person, institution, or corporation having property subject to its disposal,enabling itself or another to designate, within such limits as it shall prescribe, theappointees of the property or of any right, interest, or estate therein or the shares inwhich it shall be received.For purposes of the discussion of powers of appointment held in a fiduciary capacity,a power of appointment is any power created or reserved by any person, institution,or corporation having property subject to its disposal, enabling a fiduciary todesignate, within such limits as are shall prescribe, the appointees of the property orof any right, interest, or estate therein or the shares in which it shall be received.b. “Donor.” A donor of a power of appointment is “the person, institution, orcorporation who or which creates or reserves the power of appointment.” C.R.S. §15-2-102(3)c. “Donee.” A donee of a power of appointment is “the person, institution, orcorporation in whom or in which the power of appointment is created or reserved.” C.R.S. § 15-2-102(4). In the UDPIA, “holder” is used instead of “donee”.d. “Objects.” Objects of powers of appointment “are those persons, institutions,or corporations among whom the donee is given the power to appoint.”C.R.S. § 15-2-102(5).e. “Appointees.” Appointees of powers of appointment “are those persons,institutions, or corporations to whom property or any right, interest, or estate thereinis appointed by the donee.”C.R.S. § 15-2-102(6).

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f. “Takers.” Takers in default of appointment are “those persons, institutions,or corporations who will receive property not effectively appointed.”C.R.S. § 15-2-102(7).

2. General vs. Special Power of Appointment. There are two types of powers ofappointment: general and specific.

a. A general power of appointment is a power of appointment that is consideredproperty of the donee, and is “a power of appointment which is exercisable in favorof the donee, his estate, his creditors, or the creditors of his estate.” C.R.S. § 15-2-103(1).16

b. “A special power of appointment is any power of appointment which is nota general power of appointment.” C.R.S. § 15-2-103(2).

B. Disclaimers of Powers of Appointment and Other Powers Not Held in a Fiduciary Capacity

15-11-1209. Disclaimer of power of appointment or other power not held in fiduciarycapacity.(1) If a holder disclaims a power of appointment or other power not held in afiduciary capacity, the disclaimer applies only to that holder, and the following rulesapply:

(a) If the holder has not exercised the power, the disclaimer takes effect asof the time the instrument creating the power becomes irrevocable;(b) If the holder has exercised the power and the disclaimer is of a powerother than a presently exercisable general power of appointment, thedisclaimer takes effect immediately after the last exercise of the power; and(c) The instrument creating the power is construed as if the power expiredwhen the disclaimer became effective

1. A disclaimer of power of appointment or power not held in a fiduciary capacityapplies only to the holder of the power. § 15-11-1209(1). Section 1 of this statute excludesall powers held in a fiduciary capacity, e.g., trustee, agent, and personal representative, orother holder of property for distribution to others. Disclaimers of powers held in fiduciarycapacities are governed by C.R.S. § 15-11-1211. This section also ensures that powers donot lapse because of the disclaimer itself. The instrument that created the power may includeprovisions such that the power lapses if disclaimed (e.g., “If A disclaims the power toappoint my property, then the power shall lapse and the property shall be distributed to B”),but, absent such provisions, the disclaimer itself will not destroy the power.

2. Effect and expiration of a Disclaimer of Powers not Held in a Fiduciary Capacity. A disclaimer may be created such that it is effective either before or after the power isexercised. If the power has not been exercised, the disclaimer “takes effect as of the time the

For federal tax law issues, 26 U.S.C. § 2041 must be consulted. It contains a16

definition of general power of appointment which includes the requirements setforth in C.R.S. § 15-2-103(1).

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instrument creating the power becomes irrevocable[.]” § 15-11-1209(1)(a). So, for example,if A’s will gives A’s children cash subject to the power in B to appoint cash to A’sgrandchildren, and if B disclaims that power, then the disclaimer will take effect as of theA’s death. Note that, pursuant to § 15-11-1209(1)(d), which is discussed in paragraph 4 ofthis section, the power expires as of A’s death. If the will had named C as a contingentdonee of the power, then the power in B would have expired on A’s death, and C would havethe right to exercise the power.

3. Effect and expiration of Disclaimer on Exercised Powers. With the exception ofpresently exercisable general powers of appointment, if the holder has exercised the power17

and then disclaims, “the disclaimer takes effect immediately after the last exercise of thepower[.]” § 15-11-1209(1)(b). Accordingly, if, in the example in paragraph 2, B appointssome funds to A’s grandchildren on November 1, 2011 and then disclaims the power priorto appointing more funds, the disclaimer is effective, and pursuant to § 15-1-1209(1)(d), thepower expires immediately after B exercised the power. If C is an alternate donee of thepower, C would be able to appoint funds immediately upon the effective date of B’sdisclaimer.

C. Disclaimer by Appointee, Object or Taker in Default.

§ 15-11-1210. Disclaimer by appointee, object, or taker in default of exercise ofpower of appointment.(1) A disclaimer of an interest in property by an appointee of a power of appointmenttakes effect as of the time the instrument by which the holder exercises the powerbecomes irrevocable.(2) A disclaimer of an interest in property by an object or taker in default of anexercise of a power of appointment takes effect as of the time the instrument creatingthe power becomes irrevocable.

1. Disclaimer by Appointee. A disclaimer by an appointee will take “effect as of thetime the instrument by which the holder exercises the power becomes irrevocable.” § 15-11-1210(1). Accordingly, and continuing with the example in the previous section, if agrandchild of A disclaims the interest in property that is subject to the power of appointment,the disclaimer will take effect as of A’s death. This is consistent with a disclaimer by adevisee of an interest in property that is not subject to a power of appointment. Thedisclaimer is effective as of the testator’s death. If the power of appointment had beenexercised in part, the appointee’s disclaimer will be effective as of the A’s death with regardto the remaining property that is subject to the power of appointment.

2. Disclaimer by object or taker in default. The same rules apply to objects and takers

A presently exercisable general power of appointment is a power of appointment17

which the holder may exercise during his lifetime and which allows the holder toexercise in favor of himself, his estate, or his creditors. 26 U.S.C. § 2041(defining “general power of appointment”).

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in default of powers of appointment.

D. Powers Held in a Fiduciary Capacity.

§ 15-11-1211. Disclaimer of power held in fiduciary capacity.(1) If a fiduciary disclaims a power held in a fiduciary capacity that has not beenexercised, the disclaimer takes effect as of the time the instrument creating the powerbecomes irrevocable.(2) If a fiduciary disclaims a power held in a fiduciary capacity that has beenexercised, the disclaimer takes effect immediately after the last exercise of the power.(3) A disclaimer pursuant to this section is effective as to another fiduciary if thedisclaimer so provides and the fiduciary disclaiming has the authority to bind theestate, trust, or other person for whom the fiduciary is acting.

1. Disclaimer if power has not been exercised. If the power has not been exercisedwhen the fiduciary disclaims, the disclaimer takes effect at the time the instrument thatcreated the power is irrevocable. For example, Decedent A’s will gives his children hisproperty subject to the power of appointment in A’s personal representative, to appoint A’sproperty among A’s children in the course of the administration of the estate. The personalrepresentative disclaims the power. The disclaimer is effective on A’s death.

2. Disclaimer if power has been exercised. If the power has been exercised when thefiduciary disclaims, the disclaimer takes effect immediately after the last exercise of thepower. For example, same facts as above, but on October 31, 2011, the personalrepresentative distributes a portion of the property pursuant to the power of appointment, andthen disclaims the power. The disclaimer is effective on October 31, 2011 immediately afterthe personal representative made the distribution.

3. Disclaimer effectiveness as to other fiduciaries. A disclaimer is effective as toanother fiduciary if it provides for such effectiveness, and if the fiduciary has the authorityto bind the estate, trust, or other person for whom the fiduciary is acting. For example, apower of attorney gives the agent the power to appoint property on behalf of the principal andincludes an unambiguous provision that the agent can bind the principal. The agent’sdisclaimer provides that it is effective as to all fiduciaries. The agent then resigns. No otherfiduciary may exercise the power of appointment.

IX. Delivery or Filing of Disclaimers

15-11-1212. Delivery or filing.(1) As used in this section, "beneficiary designation" means an instrument, other thanan instrument creating a trust, naming the beneficiary of:

(a) An annuity or insurance policy;(b) An account with a designation for payment on death;(c) A security registered in beneficiary form;(d) A pension, profit-sharing, retirement, or other employment-relatedbenefit plan; or

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(e) Any other nonprobate transfer at death.(2) Subject to subsections (3) to (15) of this section, delivery of a disclaimer may beeffected by personal delivery, first class mail, or any other method likely to result inits receipt.(3) In the case of an interest created under the law of intestate succession or aninterest created by will, other than an interest in a testamentary trust:

(a) A disclaimer shall be delivered to the personal representative ofthe decedent's estate; or(b) If no personal representative is then serving, a disclaimer shall befiled with a court having jurisdiction to appoint a personalrepresentative.

(4) In the case of an interest in a testamentary trust:(a) A disclaimer shall be delivered to the trustee then serving or, if notrustee is then serving, to the personal representative of the decedent'sestate; or(b) If no personal representative is then serving, the disclaimer shallbe filed with a court having jurisdiction to enforce the trust.

(5) In the case of an interest in an inter vivos trust:(a) A disclaimer shall be delivered to the trustee then serving;(b) If no trustee is then serving, the disclaimer shall be filed with acourt having jurisdiction to enforce the trust; or(c) If the disclaimer is made before the time the instrument creatingthe trust becomes irrevocable, it shall be delivered to the settlor of arevocable trust or the transferor of the interest.

(6) In the case of an interest created by a beneficiary designation made before thetime the designation becomes irrevocable, a disclaimer shall be delivered to theperson making the beneficiary designation.(7) In the case of an interest created by a beneficiary designation made after the timethe designation becomes irrevocable, a disclaimer shall be delivered to the personobligated to distribute the interest.(8) In the case of a disclaimer by a surviving holder of jointly held property, thedisclaimer shall be delivered to the person to whom the disclaimed interest passes.(9) In the case of a disclaimer by an object or taker in default of exercise of a powerof appointment at any time after the power was created:

(a) The disclaimer shall be delivered to the holder of the power or tothe fiduciary acting under the instrument that created the power; or(b) If no fiduciary is then serving, the disclaimer shall be filed witha court having authority to appoint a fiduciary.

(10) In the case of a disclaimer by an appointee of a nonfiduciary power ofappointment:

(a) The disclaimer shall be delivered to the holder, the personalrepresentative of the holder's estate, or to the fiduciary under theinstrument that created the power; or(b) If no fiduciary is then serving, the disclaimer shall be filed witha court having authority to appoint a fiduciary.

(11) In the case of a disclaimer by a fiduciary of a power over a trust or estate, the

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disclaimer shall be delivered as provided for in subsection (3), (4), or (5) of thissection, as if the power disclaimed were an interest in property.(12) In the case of a disclaimer of a power by an agent, the disclaimer shall bedelivered to the principal or the principal's agent, guardian, or conservator.(13) In the case of a disclaimer of a power not held in a fiduciary capacity, thedisclaimer shall be delivered to the fiduciary under the instrument that created thepower, or to the person obligated to distribute the property.(14) Except as provided for in subsections (3) to (8) of this section, in the case of aninterest the disposition of which is determined pursuant to section 15-11-1206 (2) (c)(IV), the disclaimer shall be delivered or filed as follows:

(a) Delivered to the transferor of the interest if the transferor is thenliving;(b) Delivered to the personal representative of the estate of thetransferor, if the transferor is not then living; or(c) Filed with a court having jurisdiction to appoint a personalrepresentative for the estate of the transferor, if the transferor is notthen living and a personal representative of the estate of the transferoris not then serving.

(15) In the case of a disclaimer of an interest in real property in which the disclaimanthas a recorded interest, a copy of the disclaimer shall be recorded in the office of theclerk and recorder of the county in which the interest disclaimed is located. Forpurposes of this subsection (15) and section 15-11-1215, "recorded interest" meansan interest in real property that has been recorded in the office of the county clerk andrecorder of the county in which the real property is located.

A. The Requirement of Delivery and/or Filing; Recording

A disclaimer must be delivered or filed to be effective. C.R.S. § 15-11-1205(3). However,as discussed in Section XII regarding filing and registering disclaimers (C.R.S. § 15-11-1215), a disclaimer that has not been filed or recorded is valid as between the disclaimant andthe persons to whom the power or interest passes. Section 15-11-1212 provides that adisclaimer must be (1) delivered to a person, (2) filed with a court, or, with regard to aninterest in real property in which the disclaimant has a record interest, (3) recorded and eitherdelivered to a person or filed with the court. Delivery of a disclaimer “may be effected bypersonal delivery, first class mail, or any other method likely to result in its receipt.” § 15-11-1212(2). When filing is required, it is effected by filing the disclaimer with a court ofproper jurisdiction.

1. Interest created under intestate succession or by will, other than a testamentary trust. § 15-11-1212(3). A disclaimer of this interest must be delivered to the personalrepresentative of the decedent’s estate. If no personal representative has been appointed, thedisclaimer must be filed with the court having jurisdiction to appoint a personalrepresentative. This is a change from the former C.R.S. § 15-11-801(2)(a), which requiredthat a disclaimer be filed with the court regardless of whether a personal has been appointed.

2. Interest in a testamentary trust. § 15-11-1212(4). The disclaimer must be delivered

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to the trustee of the trust, or if no trustee is serving, to the personal representative of thedecedent’s estate or, if no personal representative has been appointed, the disclaimer mustbe filed with the court having jurisdiction to enforce the trust.

3. Interest in an inter vivos trust. § 15-11-1212(5). The disclaimer must be delivered to the trustee then serving, or if no trustee is serving, it must be filed with the court havingjurisdiction to enforce the trust, or, “[i]f the disclaimer is made before the time the instrumentcreating the trust becomes irrevocable, it shall be delivered to the settlor of a revocable trustor the transferor of the interest.”

4. Interest created by beneficiary designation before the time the designation becomesirrevocable. § 15-11-1212(6). The disclaimer must be delivered to the person making thedesignation. For example, a disclaimer by a beneficiary of life insurance, which disclaimeris made prior to the insured’s death, must be delivered to the insured.

5. Interest created by beneficiary designation after the time the designation becomesirrevocable. § 15-11-1212(7). The disclaimer must be delivered to the person who isobligated to deliver the interest. For example, a disclaimer by a beneficiary of life insurance,which disclaimer is made after the insured’s death, must be delivered to the life insurancecompany.

6. Interest in jointly owned property disclaimed by a surviving holder. § 15-11-1212(8).a. Joint interests in property other than real property. The disclaimer must bedelivered to the person to whom the interest passes.b. Joint interests in real property. The disclaimer must be delivered to theperson to whom the interest passes, and, pursuant to § 15-11-1212(15), a copy of thedisclaimer must be recorded with the clerk and recorder of the county in which thereal property is situate

7. Disclaimer by an object or taker in default of exercise of a power of appointment atany time after the power was created. § 15-11-1212(9). The disclaimer must be deliveredto the holder (i.e., the donee) of the power or to the fiduciary acting under the instrument thatcreated the power, e.g., the trustee of a trust that created the power. If no fiduciary is serving,the disclaimer must be filed with the court that has jurisdiction to appoint a fiduciary. Thiswould be the case if the holder is deceased or cannot be found to effect delivery, and nofiduciary is serving.

8. Disclaimer by appointee of non-fiduciary power of appointment. § 15-11-1212(10). The disclaimer must be delivered to the holder of the power or the fiduciary acting under theinstrument that created the power, or, if no fiduciary is serving, it must be filed with the courtthat has jurisdiction to appoint the fiduciary.

9. Disclaimer by a fiduciary of a power over a trust or estate. § 15-11-1212(11). Thedisclaimer must be delivered or filed as if it were a disclaimer of an interest in property. Accordingly, § 15-11-1212(3), (4), or (5) will control the manner of disclaimer, dependingupon whether the disclaimer involved intestacy (§ 15-11-1212(3)), a will (§ 15-11-1212(3)),

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a testamentary trust (§ 15-11-1212(4)), or an inter vivos trust (§ 15-11-1212(5)). Please referto paragraphs 1, 2, and 3 above.

10. Disclaimer of a power by an agent. § 15-11-1212(12). The disclaimer must bedelivered to the principal, or to his or her agent, guardian, or conservator. There is noprovision for filing the disclaimer with any court in the case of a guardian or conservator. Consequently, delivery may be made to the ward, to the protected person, or to the guardianor conservator.

11. Power not held in a fiduciary capacity. § 15-11-1212(13). The disclaimer must bedelivered to the fiduciary acting under the instrument that created the power, or to the personobligated to deliver the property. For example, a trust gives property to A’s children, subject to the power in B to appoint the property among A’s children. B disclaims by delivering thedisclaimer to the trustee of A’s trust.

12. Interest whose disposition is governed by § 15-11-1206(2)(c)(IV) (interests that wouldpass as part of the disclaimant’s estate had the disclaimant died immediately before the timeof distribution). § 15-11-1212(14). The disclaimer must be delivered to the transferor, ifalive, or if not alive, delivered to the personal representative of the transferor’s estate or filedwith a court having jurisdiction to appoint a personal representative if none had beenappointed.

13. Interests in real property in which disclaimant has record interest. § 15-11-1212(15). If a disclaimant disclaims an interest in real property in which he or she has a recordedinterest, the disclaimer must be recorded at the clerk and recorder of the county in which thereal property is situate. For example, real property is held jointly among four holders. Onejoint holder dies, and one of the surviving holders desires to disclaim the deceased holder’sinterest. The disclaimer is delivered to the surviving holders pursuant to § 15-11-1212(8),and is recorded pursuant to § 15-11-1212(15). IMPORTANT: If the disclaimer is notrecorded, it will not be effective. § 15-11-1205(3). Neither will it be valid between thedisclaimant and the person to whom the interest passes. § 15-11-1215. Failure to record adisclaimer of an interest in real property is fatal to the disclaimer. The interest will remainas the disclaimant’s property. Also, as discussed in Section IV, it is sound practice to havethe disclaimant’s signature acknowledged by a notary.

X. Disclaimer Barred or Limited.

15-11-1213. When Disclaimer Barred or Limited.(1) A disclaimer is barred by a written waiver of the right to disclaim.(2) A disclaimer of an interest in property is barred if any of the following eventsoccur before the disclaimer becomes effective:

(a) The disclaimant accepts the interest sought to be disclaimed;(b) The disclaimant voluntarily assigns, conveys, encumbers, pledges, ortransfers the interest sought to be disclaimed or contracts to do so; or(c) A judicial sale of the interest sought to be disclaimed occurs.

(3) A disclaimer, in whole or in part, of the future exercise of a power held in a

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fiduciary capacity is not barred by its previous exercise.(4) A disclaimer, in whole or in part, of the future exercise of a power not held in afiduciary capacity is not barred by its previous exercise unless the power isexercisable in favor of the disclaimant.(5) A disclaimer is barred or limited if so provided by law other than this part 12.(6) A disclaimer of a power over property that is barred by this section is ineffective.A disclaimer of an interest in property that is barred by this section takes effect as atransfer of the interest disclaimed to the persons who would have taken the interestunder this part 12 had the disclaimer not been barred.(7) Notwithstanding any other provision in this part 12, this part 12 shall not modifythe construction of law or application of law with respect to:

(a) A disqualification of medical assistance benefits under title 25.5, C.R.S.,to a disclaimant who is or was an applicant for or recipient of such benefits;or(b) A recovery from the estate of a deceased recipient of such medicalassistance benefits.

A. A disclaimer may barred or limited by a disclaimant’s actions or inactions. Section 15-11-1213 provides rules as to the action and inactions that result in a disclaimer being barred or limited. If a power is barred pursuant to § 15-11-1213, it is ineffective. § 15-11-1213(6). If a disclaimer ofan interest in property is barred by § 15-11-1213, the disclaimer takes effect as a transfer of theinterest to the persons who would take the property as if the disclaimer were effective. Id. It mustbe understood that a disclaimer cannot be barred after it becomes effective. Effectiveness occurspursuant to § 15-11-1206(3). Do not misunderstand a disclaimer’s effectiveness and the time adisclaimer takes effect. “Effectiveness” refers to the validity of a disclaimer. The “time a disclaimertakes effect” refers to the date on which the property or interest passes.

1. Written waiver bars disclaimer. § 15-11-1213(1). A disclaimer is barred, i.e., adisclaimer cannot be created, if it is waived in writing by the person who could disclaim theinterest or power.2. Disclaimer of interests in property. § 15-11-1213(2). A disclaimer of an interest inproperty is barred if the following occur prior to the disclaimer being effective: Thedisclaimant accepts the interest, the disclaimant voluntarily assigns, conveys, encumbers,pledges, or transfers the interest, or A judicial sale of the interest disclaimed occurs.3. Disclaimer of a future exercise of power.

a. Power held in a fiduciary capacity. § 15-11-1213(3). A power held in afiduciary capacity is not barred by a previous exercise. Accordingly, of a person whoholds a power as a fiduciary may appoint and thereafter disclaim.b. Power not held in a fiduciary capacity. § 15-11-1213(4). A power not heldin a fiduciary capacity is not barred by a previous exercise, unless the power wasexercised in favor of the disclaimant.

4. Disclaimer barred by other law. § 15-11-1213(5). A disclaimer is barred or limitedif other laws bars or limits the disclaimer. For example, a disclaimer of inherited property,or property distributed from a trust or through a beneficiary designation will not avoid aFederal tax under 26 U.S.C. § 6321, because the such rights to inherit or receive areconsidered rights to property under federal law. Drye v. United States, 528 U.S. 49 (1999).

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See note 15, supra.5. Ineligibility or Disqualification of Disclaimants for and Recovery from Disclaimantsof Health Care Benefits. § 15-11-1213(7). The UDPIA does not affect law regardingineligibility to receive or disqualification for health care benefits or recovery from a person’sestate for benefits paid to that person. This section is not uniform, and was added at theinsistence of Colorado’s Department of Health Care Policy and Financing (“HCPF”).

a. Law regarding ineligibility or disqualification of benefits by reason ofdisclaimer is not changed by the UDPIA. Pursuant to § 15-11-1213(7)(a), theUDPIA does not modify law regarding ineligibility or disqualification for benefitsunder 42 U.S.C. § 1396 or Title 25.5 of the Colorado Revised Statutes. Accordingly,a disclaimer, although not barred or limited by Title 25.5, C.R.S. will be treated asif the disclaimant transferred the value of the disclaimed interest withoutconsideration. Consequently, if a recipient of medical benefits under Title 25.5,C.R.S. disclaims an interest or power (such as a general power of appointment), theapplicant or recipient will be considered to have transferred the value of thedisclaimed interest or power, which, if the value exceeds the maximum value ofcountable resources (currently $2,000.00), will result in ineligibility ordisqualification. Pursuant to 42 U.S.C. § 1396A(a)(18), each state must include inits Medicaid program rules provisions regarding transfers of assets. “Assets” is adefined term under 42 U.S.C. § 1396p(h)(1), and, for purposes of this discussion,means “all income and resources of the individual and of the individual’s spouse,including any income or resources which the individual or such individual’s spouseis entitled to but does not receive because of action . . . by the individual or suchindividual’s spouse . . . .” In Colorado, the same language is used in 10 CCR 2505-10 8.100.E2 and in 10 CCR 2505-10 8.100.F(2)(a). Although “action” is not defined,HCPF considers disclaimers as actions that, if the disclaimer is effective within theapplicable look-back period (currently 5 years), it will cause ineligibility or disqualification if the amount disclaimed, when added to the disclaimant’s countableresources, exceeds the maximum amount of allowed countable resources. Thedisclaimer is not barred or limited, but the result of the disclaimer is ineligibility ordisqualification if an applicant or recipient, respectively, of medical benefits underTitle 25.5, C.R.S. disclaims any interest in propertyb. Law regarding recovery of assets from deceased recipients of benefits is notchanged by UDPIA. After the death of a recipient of medical benefits under 42U.S.C. § 1396 and Title 25.5, C.R.S., specifically, C.R.S. § 25.5-4-302, theDepartment of Health Care Policy and Financing may file a claim in the decedent’sestate. The claim will be given priority as set forth in C.R.S. § 15-12-805(1)(f.5), ifit is appropriately and timely presented pursuant to §§ 15-12-803 & 15-12-804. Theclaim will be paid from estate assets, subject to senior claims in § 15-12-805, and tothe family allowance and exempt property allowance of C.R.S. §§ 15-11-403 & 15-11-404. The UDPIA does not change this. Nor does the UDPIA change the holdingin Matter of Estate of Colacci, 37 Colo. App. 369, 549 P.2d 1096 (1976), whichprovides that a proper disclaimer will void creditors. Thus, given the following facts:A is a now-deceased Medicaid recipient who survived B. B’s will provides that hisestate goes to A, or if A fails to survive, to A’s children. HCPF files a claim againstA’s estate, and A’s personal representative disclaims A’s interest in B’s estate. B’s

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estate will go to A’s children, and the disclaimer will avoid the medicaid claim onA’s estate. See, Estate of Kirk, 97-1181 (Iowa, March 24, 1999)(personalrepresentative of deceased widow’s estate disclaimed predeceased husband’sbequests, which bequests avoided Medicaid claim against widow’s estate).

XI. Tax-Qualified Disclaimers

15-11-1214. Tax-qualified disclaimers.Notwithstanding any other provision of this part 12, if, as a result of a disclaimer ortransfer, the disclaimed or transferred interest is treated pursuant to the provisions oftitle 26 of the United States internal revenue code, as now or hereafter amended, orany successor statute thereto, and the regulations promulgated thereunder, as neverhaving been transferred to the disclaimant, then the disclaimer or transfer is effectiveas a disclaimer pursuant to this part 12.

This statute ensures that a qualified disclaimer made pursuant to Federal tax law will be avalid disclaimer under the UDPIA. Only a brief review of 26 U.S.C. § 2518 need be doneto understand that the requirements for a valid disclaimer under 26 U.S.C. § 2518 are not thesame as those under the UDPIA. For example, 26 U.S.C. § 2518(3) provides that a writtentransfer of property to the person(s) who would have received the property had a disclaimerbeen made in accordance with 26 U.S.C. § 2518 is considered a qualified disclaimer. Thus,for estate and gift tax purposes, which taxes can be substantial, the failure to satisfy therequirements under the UDPIA when the intent by the disclaimant was to satisfy 26 U.S.C.§ 2518 will not defeat the disclaimer. This also avoids any attacks on the UDPIA on thegrounds of federal preemption and 26 U.S.C. § 2518 occupying the field regardingdisclaimers. Arguably, a deed transferring real property signed by disclaimant in favor of the takers who would have received the real property if the disclaimant had disclaimed wouldsatisfy 26 U.S.C. § 2518.

XII. Filing or Registering Disclaimers

15-11-1215. Filing or registering of disclaimer.If an instrument transferring an interest in or power over property subject to a disclaimer isrequired or permitted by law to be filed or registered, the disclaimer may be filed orregistered. Failure to file or register the disclaimer does not affect its validity as between thedisclaimant and persons to whom the property interest or power passes by reason of thedisclaimer, provided, however, that a disclaimer of an interest in real property in which thedisclaimant has a recorded interest is not effective and therefore is not valid as between anypersons until a copy of the disclaimer is recorded in section § 15-11-1212(14). This languageis erroneous, and is expected to be amended in the next session. The last words of thissection should read, “. . . a copy of the disclaimer is recorded in section 15-11-1212(15).”

Except for disclaimers of interests in real property, a disclaimer that is not filed or recordedaccording to the UDPIA or as required by any other law is nevertheless valid between thedisclaimant and the persons to whom the interest or power passes. Thus, if A disclaims aninterest in personal property, but does not deliver or file the disclaimer, and if B is the person

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to whom the property passes by reason of the disclaimer, the personal property will pass toB. However, the disclaimer will not be valid as to A’s creditors, who may attach the personalproperty. B may compel A to give him the property if A has not done so.

If the property in the foregoing example is real property, and the disclaimer is not recordedpursuant to § 15-11-1205(3), the disclaimer is not effective or valid, and the interest in thereal property will not pass to B. Note that the disclaimer need not be delivered or filed andrecorded simultaneously. Recording can occur at any time before or after delivering or filing. However, the disclaimer will not be effective or valid until it is recorded.

This statute raises the possibility of what may be called an “intentionally defectivelydisclaimer.” For example, A is an heir of X, who died leaving A real property, or if A failsto survive, to B. If A is concerned that creditors will attach the real property before it isdistributed from the estate, A can execute a disclaimer and delay recording it. If the creditorslevy on A’s share of the estate, A then can record the disclaimer, which will transfer it to B. If A’s creditors do not act, then A can destroy the disclaimer. The same will result withpersonal property if A delays delivering the disclaimer to B until A ascertains whethercreditors will levy on his estate share. Of course, creditors can wait until the A receives theinheritance, but if the creditors face a statute of limitations, the creditor will have no choicebut to attach A’s share of the estate prior to distribution.

XIII. Application to existing relationships.

15-11-1216. Application to existing relationships.Except as otherwise provided for in section 15-11-1213, an interest in or power over propertyexisting on August 10, 2011, for which the time for delivering or filing a disclaimer underlaw superseded by this part 12 has not expired may be disclaimed after August 10, 2011.

This important statute allows a person to disclaim an interest in or power over property if thetime to disclaim the interest or power pursuant to former C.R.S. § 15-11-801(2) had notexpired prior to August 10, 2011, the enactment date of the UDPIA. Accordingly, if A dieson June 1, 2011, B, an heir of A’s estate, may disclaim prior to August 10, 2011 pursuant to§ 15-11-801, or B may disclaim on and after August 10, 2011 pursuant to the UDPIA. Whatis not clear is whether the time limit of § 15-11-801(2) or of the UDPIA applies. Bestpractices dictate to adhere to the deadline in § 15-11-801(2). This will avoid the expense oflitigation. The argument that the UDPIA applies, is that § 15-11-1203 states that the UDPIA“applies to disclaimers of any interest in or power over property, whenever created.”

XIV. Uniformity of application and construction.

15-11-1217. Uniformity of application and construction.In applying and construing this part 12, consideration shall be given to the need to promoteuniformity of the law with respect to its subject matter among the states that enact it.

This statute is self-explanatory.

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XV. Severability

15-11-1218. Severability.If any provision of this part 12 or its application to any person or circumstance is heldinvalid, the invalidity shall not affect any other provision or application of this part 12 thatcan be given effect without the invalid provision or application.

This statute is self-explanatory.

XVI. The Drama’s Done

Disclaimers can be vital tools in a practitioner’s toolbox. They create necessary legal fictionsthat minimize taxes, that pass property to persons who, through a mistake in drafting, were notdevised an inheritance, and they avoid creditors. But to do these things, a disclaimer must be draftedcorrectly, and it must be filed or delivered, and, in the case of real property in which the disclaimanthas a record interest, it must be recorded correctly. How ironic, then that this brings us thankfullyback to our ignored grub-worm of a sub-sub, as we realize the truth of Joseph Conrad’s words, “Howto make the disclaimer convincing enough is what bothers me.”

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Exhibit 1C.R.S. § 15-11-801

§ 15-11-801. Disclaimer of property interests

(1) Right to disclaim interest in property. A person, or the representative of a person, towhom an interest in or with respect to property or an interest therein devolves by whatever meansmay disclaim it in whole or in part by delivering or filing a written disclaimer under this section. The right to disclaim exists notwithstanding (i) any limitation on the interest of the disclaimant inthe nature of a spendthrift provision or similar restriction or (ii) any restriction or limitation on theright to disclaim contained in the governing instrument. For purposes of this subsection (1), the"representative of a person" includes a personal representative of a decedent, a conservator of aprotected person, an agent acting on behalf of that person within the express authority of a power ofattorney, and any other fiduciary acting on behalf of the person.

(2) Time of disclaimer. The following rules govern the time when a disclaimer shall befiled or delivered:

(a) If the property or interest has devolved to the disclaimant under a testamentary instrumentor by the laws of intestacy, the disclaimer shall be filed, if of a present interest, not later than ninemonths after the death of the deceased owner or deceased donee of a power of appointment and, ifof a future interest, not later than nine months after the event determining that the taker of theproperty or interest is finally ascertained and his or her interest is indefeasibly vested. If thedisclaimant does not have actual knowledge of the existence of the interest, such disclaimer shall befiled not later than nine months after the disclaimant has actual knowledge of the existence of theinterest. The disclaimer shall be filed in the court of the county in which proceedings for theadministration of the estate of the deceased owner or deceased donee of the power are pending orwhere they would be pending if commenced. A copy of the disclaimer shall be delivered or mailedto any personal representative or other fiduciary of the decedent or donee of the power.

(b) If a property or interest has devolved to the disclaimant under a nontestamentaryinstrument or contract, the disclaimer shall be delivered or filed, if of a present interest, not later thannine months after the effective date of the nontestamentary instrument or contract and, if of a futureinterest, not later than nine months after the event determining that the taker of the property orinterest is finally ascertained and his or her interest is indefeasibly vested. If the person entitled todisclaim does not have actual knowledge of the existence of the interest, the disclaimer shall bedelivered or filed not later than nine months after the person learns of the existence of the interest. The effective date of a revocable instrument or contract is the date on which the maker no longer haspower to revoke it or to transfer to himself or herself or another the entire legal and equitableownership of the interest. The disclaimer or a copy thereof shall be delivered in person or mailedby registered or certified mail, return receipt requested, to the person who has legal title to orpossession of the interest disclaimed, or is entitled thereto in the event of the disclaimer.

(c) A surviving joint tenant may disclaim the entire interest or any portion thereof in anyproperty or interest therein that is the subject of a joint tenancy devolving to him or her, by right ofsurvivorship.

(d) If real property or an interest therein is disclaimed, a copy of the disclaimer shall berecorded in the office of the county clerk and recorder of the county in which the property or interestdisclaimed is located.

(3) Form of disclaimer. The disclaimer shall (i) describe the property or interestdisclaimed, (ii) be signed by the disclaimant, and (iii) be acknowledged if it affects real property oran interest therein.

(4) Effect of disclaimer. The effects of a disclaimer are:(a) If property or an interest therein devolves to a disclaimant under a testamentary

instrument, under a power of appointment exercised by a testamentary instrument, or under the lawsof intestacy, and the decedent has not provided for another disposition of that interest, should it bedisclaimed, or of disclaimed or failed interests in general, the disclaimed interest devolves as if thedisclaimant had predeceased the decedent, but if by law or under the testamentary instrument thedescendants of the disclaimant would share in the disclaimed interest per capita at each generationor otherwise were the disclaimant to predecease the decedent, then the disclaimed interest passes percapita at each generation or passes as directed by the governing instrument to the descendants of thedisclaimant who survive the decedent. A future interest that takes effect in possession or enjoymentafter the termination of the estate or interest disclaimed takes effect as if the disclaimant hadpredeceased the decedent. A disclaimer relates back for all purposes to the date of death of thedecedent.

(b) If property or an interest therein devolves to a disclaimant under a nontestamentaryinstrument or contract and the instrument or contract does not provide for another disposition of thatinterest, should it be disclaimed, or of disclaimed or failed interests in general, the disclaimedinterest devolves as if the disclaimant had predeceased the effective date of the instrument orcontract, but if by law or under the nontestamentary instrument or contract the descendants of thedisclaimant would share in the disclaimed interest per capita at each generation or otherwise werethe disclaimant to predecease the effective date of the instrument, then the disclaimed interest passesper capita at each generation, or passes as directed by the governing instrument to the descendantsof the disclaimant who survive the effective date of the instrument. A disclaimer relates back forall purposes to that date. A future interest that takes effect in possession or enjoyment at or after thetermination of the disclaimed interest takes effect as if the disclaimant had died before the effectivedate of the instrument or contract that transferred the disclaimed interest.

(c) The disclaimer or the written waiver of the right to disclaim is binding upon thedisclaimant or person waiving and all persons claiming through or under either of them.

(5) Waiver and bar. The right to disclaim property or an interest therein is barred by (i) anassignment, conveyance, encumbrance, pledge, or transfer of the property or interest, or a contracttherefor, (ii) a written waiver of the right to disclaim, (iii) an acceptance of the property or interestor a benefit under it, or (iv) a sale of the property or interest under judicial sale made before thedisclaimer is made.

(6) Remedy not exclusive. This section does not abridge the right of a person to waive,release, disclaim, or renounce property or an interest therein under any other statute.

(7) Application. An interest in property that exists on July 1, 1995, as to which, if a presentinterest, the time for filing a disclaimer under this section has not expired or, if a future interest, theinterest has not become indefeasibly vested or the taker finally ascertained, may be disclaimed withinnine months after July 1, 1995.

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Exhibit 2Sample Disclaimers

Disclaimer

I, Jane Doe, agent under the power of attorney of John Doe, dated November 1, 2010, herebydisclaim all my right to exercise any power to appoint property under said power of attorney.

Dated this 1 day of November, 2011.st

/s/ Jane Doe Jane Doe, Agent for John Doe

Disclaimer by Agent of Power

DISTRICT COURT, XXXX, COLORADOCourt Address: 11 E. Disclaimer St.

Denver, CO 80202Phone Number:(303) 471-9300

In re the Estate of John Doe, Deceased.

Attorney or Party Without Attorney: James SmithJames Smith, P.C.11 E. Disclaimer Dr., Ste. 1201Denver, CO 80202Phone Number:(303) XXX-XXXX Atty. Reg. #XXXEmail: xxx@xxx.com

� COURT USE ONLY �

Case No. 11PRXXXDiv.: XX Ctrm.: YYY

DISCLAIMER

I, Jane Doe, hereby disclaim my interest in $100,000.00 cash in the Estate of John Doe, andI hereby disclaim 10% of my interest in Disclaimer Corp. common stock.

Dated this 1 day of November, 2011st

Jane Doe

/s/ Jane Doe Jane Doe, sig on file at JSPC

Partial Disclaimer of Intangible PersonalProperty

Disclaimer

I, Jane Doe, a joint owner with right of survivorship of the real property located at 12 Disclaimer Dr.,Denver, CO 80202 (the “Property”), hereby disclaim the entire interest of Sally Doe, who passedaway on October 1, 2011, and who was, on October 1, 2011, a joint owner with right of survivorshipwith me of the Property, which is described as

Lot 1, in Block 2, Disclaimer Acres Subdivision, Filing No.2, in theCounty of Denver, State of Colorado

Dated this 1 day of November, 2011.st

/s/ Jane Doe Jane Doe

STATE OF COLORADO )) ss.

COUNTY OF ADAMS )

Acknowledged to me this 1 day of November, 2011 by Jane Doe.st

My Commission expires: 11/2/2011/s/ George Notary George Notary, Notary Public, sig on file at JSPC

Disclaimer of Joint Interest In Real Property

Disclaimer

I, Jane Doe, a surviving niece of Matilda Doe, who passed away on October 1, 2009, am a pay-on-death beneficiary of account no. 11-1212-7 at Disclaimer Bank, 13 Disclaimer Blvd., Denver, CO80202. I hereby disclaim any and all interest and I have in said account.

Dated this 1 day of November, 2011.st

/s/ Jane Doe Jane Doe

Disclaimer of POD Account

DISTRICT COURT, XXXX, COLORADOCourt Address: 11 E. Disclaimer St.

Denver, CO 80202Phone Number:(303) 471-9300

In re the Estate of John Doe, Deceased.

Attorney or Party Without Attorney: James SmithJames Smith, P.C.11 E. Disclaimer Dr., Ste. 1201Denver, CO 80202Phone Number:(303) XXX-XXXX Atty. Reg. #XXXEmail: xxx@xxx.com

� COURT USE ONLY �

Case No. 11PRXXXDiv.: XX Ctrm.: YYY

DISCLAIMER

I, Jane Doe, hereby disclaim any and all interests I may have in and to the real property in theEstate of John Doe, which real property is located in Denver County, Colorado at 12 Disclaimer Dr.,Denver, CO 80202, and which is described as follows:

Lot 1, in Block 2, Disclaimer Acres Subdivision, Filing No.2, in theCounty of Denver, State of Colorado

Dated this 1 day of November, 2011st

Jane Doe

/s/ Jane Doe Jane Doe, sig on file at JSPC

STATE OF COLORADO )) ss.

COUNTY OF ADAMS )

Acknowledged to me this 1 day of November, 2011 by Jane Doe.st

My Commission expires: 11/2/2011/s/ George Notary George Notary, Notary Public, sig on file at JSPC

Disclaimer by Heir/Devisee of Real Property

DISTRICT COURT, XXXX, COLORADOCourt Address: 105 E. Vermijo, Ste. 120

Colorado Springs, CO 80903Phone Number:(719) 471-9300

In re the Estate of John Doe, Deceased.

Attorney or Party Without Attorney: James SmithJames Smith, P.C.11 E. Disclaimer Dr., Ste. 1201Denver, CO 80202Phone Number:(303) XXX-XXXX Atty. Reg. #XXXEmail: xxx@xxx.com

� COURT USE ONLY �

Case No. 11PRXXXDiv.: XX Ctrm.: YYY

DISCLAIMER

I, Jane Doe, Trustee of the John Doe Revocable Inter Vivos Trust, dtd 11/1/2010, (the“Trust”) on behalf of the Trust, hereby disclaim any and all interests the Trust has in any property,real and personal in the Estate of John Doe, including, but not limited to, the real property locatedin Denver County, Colorado at 12 Disclaimer Dr., Denver, CO 80202, which is described as follows:

Lot 1, in Block 2, Disclaimer Acres Subdivision, Filing No.2, in theCounty of Denver, State of Colorado.

Dated this 1 day of November, 2011st

John Doe Revocable Inter Vivos Trust, dtd 11/1/2010

/s/ Jane Doe By: Jane Doe, Trustee, sig on file at JSPC

STATE OF COLORADO )) ss.

COUNTY OF ADAMS )

Acknowledged to me this 1 day of November, 2011 by Jane Doe, as Trustee of the John Doest

Revocable Inter Vivos Trust, dtd 11/1/2010.

My Commission expires: 11/2/2011/s/ George Notary George Notary, Notary Public, sig on file at JSPC

Disclaimer by Trustee

Exhibit 326 U.S.C. § 2518

26 U.S.C. § 2518

(a) General ruleFor purposes of this subtitle, if a person makes a qualified disclaimer with respect to any interest inproperty, this subtitle shall apply with respect to such interest as if the interest had never beentransferred to such person.

(b) Qualified disclaimer definedFor purposes of subsection (a), the term "qualified disclaimer" means an irrevocable and unqualifiedrefusal by a person to accept an interest in property but only if -(1) such refusal is in writing,(2) such writing is received by the transferor of the interest, his legal representative, or the holder ofthe legal title to the property to which the interest relates not later than the date which is 9 monthsafter the later of -(A) the day on which the transfer creating the interest in such person is made, or(B) the day on which such person attains age 21,(3) such person has not accepted the interest or any of its benefits, and(4) as a result of such refusal, the interest passes without any direction on the part of the personmaking the disclaimer and passes either -(A) to the spouse of the decedent, or(B) to a person other than the person making the disclaimer.

(c) Other rulesFor purposes of subsection (a) -(1) Disclaimer of undivided portion of interest A disclaimer with respect to an undivided portion ofan interest which meets the requirements of the preceding sentence shall be treated as a qualifieddisclaimer of such portion of the interest.(2) PowersA power with respect to property shall be treated as an interest in such property.(3) Certain transfers treated as disclaimersA written transfer of the transferor's entire interest in the property -(A) which meets requirements similar to the requirements of paragraphs (2) and (3) of subsection(b), and(B) which is to a person or persons who would have received the property had the transferor madea qualified disclaimer (within the meaning of subsection (b)), shall be treated as a qualifieddisclaimer.