When a Fiduciary Has Not Yet Used the Power
Fiduciaries sometimes hold powers they do not want to exercise. A trustee might be given discretion over distributions that creates an unwanted tax consequence, or a personal representative might hold a power that conflicts with their other duties. Arizona law allows the fiduciary to disclaim that power entirely.
If a fiduciary disclaims a power held in a fiduciary capacity that has not been exercised, the disclaimer takes effect as of the time the instrument creating the power becomes irrevocable.
A.R.S. § 14-10011(A)When the power has never been exercised, the disclaimer reaches back to the moment the instrument became irrevocable. The law treats the fiduciary as though they never held the power at all.
After the Power Has Been Exercised
A fiduciary can also disclaim a power after having used it previously. In that case, the disclaimer does not undo past exercises. It takes effect immediately after the last time the power was used.
A disclaimer under this section is effective as to another fiduciary if the disclaimer so provides and the fiduciary disclaiming has the authority to bind the estate, trust or other person for whom the fiduciary is acting.
A.R.S. § 14-10011(C)This provision also allows one fiduciary's disclaimer to bind co-fiduciaries, but only if the disclaimer specifically says so and the disclaiming fiduciary has the authority to act on behalf of the estate or trust. This prevents one co-trustee from unilaterally eliminating powers that other co-trustees may need.
