FINAL BILL REPORT

SHB 1169

                                   C 34 L 89

BYHouse Committee on Judiciary (originally sponsored by Representatives Padden, Crane, Tate and P. King) 

Regulating disclaimers of interest by beneficiaries.

House Committe on Judiciary

Senate Committee on Law & Justice

SYNOPSIS AS ENACTED

BACKGROUND:

For various reasons, including unwanted tax consequences, a person may choose not to accept a gift.  Since 1973, Washington has had a disclaimer of interest statute that provides a formal method for the rejection of an interest.  In 1976, the federal tax code was amended with respect to the formal requirements for a disclaimer under federal law.  Some of the state law uses outdated terminology, including references to the now repealed state inheritance tax.

The disclaimer of interest statute applies to transfers of interests both during the lifetime of the transferring party and upon the death of the transferring party. However, the bulk of the procedural content of the statute deals with transfers upon death.  There is little explicit direction about the disclaimer of inter vivos transfers.  The law also requires that a disclaimer of an interest received through a will must be filed with the clerk of the court, and that the disclaimer of an interest in real property must be recorded.

The disclaimer of interest statute contains two general prohibitions against disclaiming an interest.  First, an insolvent beneficiary may not disclaim an interest.  Second, a beneficiary may not disclaim an interest if he or she has signed a waiver of disclaimer or has already voluntarily assigned or otherwise disposed of the right to his or her interest.

SUMMARY:

The "disclaimer of interest" statute, which provides a formal method for a person to reject a gift, is completely rewritten and reorganized.  Obsolete references, including the reference to the repealed state inheritance tax, are removed.

The statute is amended to make it clear that gifts received through inter vivos transfer, as well as gifts received through a testamentary will, may be disclaimed.  An explicit nine month period is provided for disclaiming an interest following an inter vivos transfer.  Filing of disclaimers of testamentary interests and recording of disclaimers of interests in real property are made optional.

An express provision is added to make it clear that once an interest has been accepted by a beneficiary, it cannot be disclaimed.  A prohibition against disclaimers by insolvent beneficiaries is removed.

VOTES ON FINAL PASSAGE:

      House 95   0

      Senate    44     0

EFFECTIVE:July 23, 1989