Disclaimers and federal tax liens' effect on inheritances

Real Property, Probate and Trust Journal, Summer 2001 by Bluestein, Brett A

In United States v. Comparato,55 a case with a result similar to that in Drye, the Second Circuit Court of Appeals held that a taxpayer's state law disclaimer of his interest in his son's estate did not prevent preexisting federal tax liens from attaching to that interest.56 As with Drye, the taxpayer in Comparato disclaimed his interest in his son's estate to avoid the attachment of federal tax liens.57 In Comparato, the taxpayer's rationale for disclaiming his interest was to defeat the federal tax liens (perhaps to ensure that the disclaimed assets went to someone other than the Service).58 The Comparato court determined that: "[s]tate law controls whether a taxpayer has an interest in property to which a lien may attach."59 Further, the court held that "once state law provided [the Comparatos] with a vested interest in the proceeds of the malpractice actions, federal law controlled whether their interests were exempt from levy by the United States."60

The Second Circuit looked to New York state law to determine the nature of the taxpayer's interest in his son's estate, and held that the right to accept the inheritance was a vested property interest at the time of the son's death.61 Because the taxpayer in Comparato had a property interest under state law, the Second Circuit held that under federal law the tax liens attached to that property interest, and the taxpayer could not disclaim his property interest to defeat the federal tax liens.62

In Mapes v. United States,63 a case in which the court reached a result different from that in Drye, the Ninth Circuit Court of Appeals held that a taxpayer's renunciation of his interest in his mother's estate prevented the attachment of pre-existing federal liens to that interest.64 Arizona's disclaimer statute, which is very similar to the Arkansas disclaimer statute, provides:

A. If by any means an interest in property or with respect to property devolves to a person, that person or that person's representative may disclaim that interest in whole or in part by delivering or filing a written disclaimer under this section. This right exists notwithstanding any limitation on the interest of the disclaimant in the nature of a spendthrift provision or similar restriction or any restriction or limitation on the right to disclaim contained in the governing instrument. For purposes of this subsection, representative includes a personal representative of a decedent, a conservator of a disabled person, a guardian of a minor or incapacitated person and an agent acting on behalf of the person within the authority of a power of attorney. B. If the property or interest has devolved to the disclaimant under a testamentary instrument or by the laws of intestacy and is of a present interest, the disclaimer must be filed not later than nine months after the death of the deceased owner or deceased donee of a power of appointment. If that property or interest is of a future interest, the disclaimer must be filed not later than nine months after the event that determines that the taker of the property or interest is finally ascertained and the interest is indefeasibly vested. The disclaimer must be filed in the court in the county in which proceedings for the administration of the estate of the deceased owner or deceased donee of the power have been commenced. A copy of the disclaimer must be delivered in person or mailed by certified mail, return receipt requested, to any personal representative or other fiduciary of the decedent or donee of the power.65