How Timing Works for Appointees
A power of appointment gives one person the authority to direct who receives certain trust property. If the holder names you as an appointee, you can disclaim the property you do not want.
This means families can use disclaimers as a planning tool for inherited wealth.
A disclaimer of an interest in property by an appointee of a power of appointment takes effect as of the time the instrument by which the holder exercises the power becomes irrevocable.
A.R.S. § 14-10010(A)A qualified disclaimer means the law treats you as if you never received the assets. The property then passes to whoever is next in line under the instrument.
Timing matters for tax purposes. Federal and state law both look at when the disclaimer took effect to set the tax result.
Default Takers and Objects of the Power
The timing rule is slightly different for default takers and objects of a power. Your disclaimer takes effect when the instrument creating the power becomes irrevocable, not the instrument exercising it.
A disclaimer of an interest in property by an object or taker in default of an exercise of a power of appointment takes effect as of the time the instrument creating the power becomes irrevocable.
A.R.S. § 14-10010(B)The effective date of a disclaimer can affect creditor claims, gift tax, and who receives the assets. As a result, knowing your category helps set the right timing.
For families with complex trust arrangements, the power of appointment is a flexible tool. Disclaimer rules help family members decide whether to accept or refuse property.