Purpose of
Estate Planning 
An estate plan, therefore, should be based on an analysis of a person's debts as well as assets, how title to these assets is held, the financial needs of the person and his family, and the person's desires regarding disposition of his estate and discharge of his debts. Once this information is obtained, the planner is in a position to make suggestions that will achieve the above purposes. Every individual's estate plan is, to some extent, unique.
Asset Inventory Discovery Tool
Tool. Before any meaningful planning can be accomplished, the estate planner must have an accurate and detailed picture of the extent and form of the estate owner's assets. Incorrect or incomplete asset information may lead to a costly planning miscalculation that may not be discovered for years (or, worse, until the estate owner's death) .
Although an estate planner may want to modify the content of the asset inventory to
meet a specific client~s situation, at a minimum, the checklist of assets should
specifically inventory the following items: (1) cash and accounts, (2) notes, a~c0unts
receivable, and mortgages, (3) bonds, (4) stock, (5) real estate, (6) employee benefits
such as profit sharing, (7) stock options, (8) insurance and annuities, (9) personal
effects, including any valuables that may require appraisal, (10) patents, trademarks,
copyrights, and royalties, (11) business interests, (12) prior gifts, g3) powers of
appointment, and (14) miscellaneous property.
The checklist should provide for obtaining the following information as to each asset:
Planners should be particularly careful to check.for the following assets, commonly overlooked by estate owners.
1. The first type of hidden asset to consider is a power of appointment over specific
property. Powers of appointment can be exercisable by deed or by will and may be special
or general in nature. The value of property subject to general powers of
appointment is includible in the holder's gross estate, even if the powers are not
exercised. Thus, if the estate owner is not aware that he holds a power of appointment,
his taxable estate may be needlessly increased. Even where the owner is aware of the
existence of the power, he may not recognize that it is an asset of measurable value.
Often, it is advantageous for the estate owner to exercise the power during his lifetime
so as to avoid unfavorable tax consequences. But, unless~he knows that the power exists
and that it has tax consequences, it is impossible for him to make an intelligent decision
as to whether to exercise the power during life, at death, or not at all.
2. Another item that requires scrutiny is life insurance. The value of life insurance policies is not includible in a decedent's estate (assuming the estate itself is not the beneficiary), unless incidents of ownership in the policy are retained by the estate owner (see T127,345). The term "incidents of ownership" has been construed broadly, and it is best that the policy and the rights afforded under it (such as the right to change beneficiaries) be checked carefully.
3. A widow or widower may not be aware of taxable interests, i.e., jointly held properties, that have passed from the deceased spouse.
4. A careful examination of prior gifts made by the estate owner is also wise in order to determine whether there is any outstanding gift tax liability and whether there is a possibility that the property that is the subject of the transfer is includible in the gross estate because of retained control or enjoyment of the property by the estate owner.
In addition to calling attention to hidden assets, a completed asset inventory may
alert the planner to possible tax breaks and difficulties. Estate size and valuation
issues often become apparent ~om the inventory. Because the federal unified transfer tax
rates are progressive, estate size is obviously a matter of prime concern in tax planning.
A sizable estate may suggest to the planner a program of making lifetime gifts, which is a
strategy made all the more viable in light of the annual gift tax exclusion amounts..
In analyzing the completed inventory, the planner should review the value that the estate
owner has assigned to the various assets. Do the assigned amounts reasonably reflect fair
market value of the assets? Was the valuation achieved by a method that the IRS would find
acceptable?
How title to assets is held is also relevant to the planner. For instance, upon an owner's death, jointly owned property automatically (by operation of law) passes to the surviving owner(s). It is generally includible in the decedent's gross estate, but passes outside of probate and the related administration of the estate. Because of this, and because of the confusion regarding the language used to create the various types of interests, the planner often will want to inspect the relevant documents in order to allow a professional evaluation of how title to the assets is in fact held.
Domicile is also an important factor in creating a plan that affords the maximum advantages to the estate owner. The estate, with the exception of real property, is generally probated in the state of domicile. State death taxes and state law as to probate, fees and the like may make it more desirable to elect one domicile over another where the client has a choice. Domicile can be an especially important consideration if one of the jurisdictions involved follows the law of community property. Finally, "double domicile" should be avoided because, in some instances, it may result in double taxation of the same estate assets.
The physical situs of all real property held by the estate owner should be disclosed
because real property is probated in the state where it is physically located. If the
property is of small value or little utility to the estate owner, such a determination may
prompt consideration of whether an out-of-state proceeding should be avoided by means of a
lifetime sale or other disposition of the property. An alternative to sale is the
conversion of the property to personalty by means of a land trust (where such arrangements
are allowed). This avoids the necessity of probating the will in more than one
jurisdiction.
Knowledge of property situated in a community property state will alert the planner to
possible applicability of community property law. If complicated community property issues
may exist, a common law jurisdiction planner may wish to consult an attorney or other
planning professional practicing in the community property state. For a detailed
discussion of community property state laws and how they affect federal taxes.
Assets Requiring Special Handling
Certain assets, such as farms and closely held businesses (including sole
proprietorships, partnerships, and closely held corporations), may require special
procedures. The assets are usually difficult for an estate executor to maintain, operate,
value, equitably distribute to heirs, or sell at a fair price. The asset inventory will
reveal the existence of such interests, and predeath planning can then take place.
In utilizing an asset inventory, all relevant personal data must also be elicited from
the estate owner. At a minimum, the following general information should be obtained: (1)
age; (2) present general health; (3) marital status; (4) any previous marriages; (5)
current main residence and length of time at the residence; (6) other residences --past
and present; (7) domicile; (8) citizenship; (9) prospective inheritances; and (10) the
number and health of children, grandchildren, and other dependents.
Beyond the factual data, the planner must be apprised of the special needs of the future
beneficiaries and the estate owner's wishes as to how he would like his property
distributed after death.
Of course, choosing the beneficiaries and distributing the property to them are matters ultimately decided by the estate owner. But, if the owner is interested in effecting the largest possible estate and gift tax savings and is somewhat flexible as to whom and how the property will pass, the planner should be able to suggest how tax-savings that comply with the estate owner's general objectives may be attained.
Often overlooked is an estate's nemesis: the client's debts. While attention may focus
upon the financial drain of an estate's administration expenses and death taxes, do not
overlook the all-important reduction in net worth brought on by encumbered assets and
other outstanding debts at time of death, although the debts are generally deductible for
estate tax purposes.
In addition to information regarding a client's assets, the estate planner with foresight
should also take pains to secure the following:
Handling Funeral and Administrative Expenses
Handling Funeral and Administration Expenses. How the estate is to handle the expected funeral and administration expenses should also be considered early on in the estate planning process, i.e., during the drafting of the will. Although the terms of the will must be tailored to the estate owner's individual needs and goals, it is usually desirable for purposes of liquidity include instructions that indicate exactly how these expenses are to be paid, by whom, and when.
It is also important for the individual and his estate planning advisor to bear in mind that reasonable funeral and administration expenses generally qualify for an estate tax deduction and, to that extent, can be counted upon to minimize the estate's tax liability. For instance, the cost of a grave marker, burial lot or vault, executor's commission, and attorney's fees are typically deductible against the estate's taxable gross estate and will thereby offset the potential estate tax liability.
Choice of Executor. At least one will provision, that of naming the executor(s) (termed "personal representative" if an estate without a will is nevertheless probated), should be included in all wills.
It is the executor who has the wide-ranging and vital duties and responsibilities of administering the decedent's estate, including marshalling the decedent's assets and protecting them from loss; paying the decedent's debts; operating, distributing or disposing of the decedent's business interests; petitioning to or appearing before the probate court on behalf of the decedent's estate; ~ling tax returns (federal income and estate and state income and inheritance); and seeing to it that the taxes are paid. His integrity and ability to make sound business judgments can mean that more estate assets will go to the decedent's heirs. Conversely, a lack of either attribute could severely defeat the purpose of the estate plan.
Because of the executor's importance in the final implementation of the estate owner's
plan, this appointment should be viewed by the estate owner as something more than an
office that will pass to someone because of his formal ties to the testator (person who
makes a will) or will be conferred as an honorarium to some deserving individual.
The main questions are: Who is to serve as executor? With what powers and responsibilities
is the executor to be charged? These questions will be dealt with separately below.
The most basic decision to be made regarding the executor is whether to choose an individual or a corporate executor. Each choice produces potential advantages and disadvantages that must be evaluated primarily in terms of the estate owner's individual needs.
Appointment of a corporate executor, for example, a bank or a trust company, can have several advantages. Chief among these is expertise. The corporate executor can be expected to have handled hundreds of estates. In,the course of doing so, its personnel have been exposed to the duties that it must perform as an executor. Procedures that might baffle an individual without estate administration experience are "routine" matters to corporate executors.
The likelihood that a corporate executor will be viewed as more impartial than a
bene~ciary serving as the executor might support the choice of a corporate executor. This
consideration can be particularly important in cases where the executor is given broad
powers that will affect the amounts distributed to the various beneficiaries and where
inter-family disputes can be expected to occur.
Another advantage of selecting a corporate executor is stability --both in regard to
~nancial soundness and continued existence. In most, if not all states, an executor must
post a bond or other evidence of financial stability before it can act as a fiduciary.
This is important because the personal liability that the law places on an executor
(whether individual or corporate) upon certain estate losses may be meaningless if the
executor is without adequate financial resources.
A corporate executor also can be expected to have a longer existence than individual
executors, who, while the estate administration is still in progress, may die, become
incapacitated, leave the domicile jurisdiction, or otherwise be unable to fulfill their
duties. As a corporation, the corporate executor survives the death of any of its
employees, officers or shareho~ders.
Use of a corporate executor may also be indicated if there are no qualified individuals
who wish to shoulder the duties and responsibilities of an executor.
Several potential disadvantages also accompany the selection of a corporate executor. First, as a corporate entity, the corporate executor may not have an adequate understanding of the circumstances surrounding the estate owner and his family. Thus, in fulfilling its duties and exercising discretion granted it under the will, the corporate executor may be farther removed from the decedent's wishes than an individual executor having familiarity with the decedent and his family.
Another potential disadvantage of a corporate executor is monetary. As a for-profit organization the corporate executor's fees may be higher than those that would be charged by an individual who may have close ties to the estate owner and his family. This concern can be tempered somewhat by the fact that executor's fees must generally be approved by the state probate court, with fees in excess of established norms requiring detailed substantiation to receive court approval.
Selection of an individual (or individuals) to serve as executor or executors likewise has advantages and disadvantages. What represents a disadvantage of selecting a corporate executor usually corresponds to an advantage of an individual executor, and vice versa.
The most obvious advantage of selecting an individual is that the person serving as executor can be thoroughly knowledgeable about the estate owner, his family, and the circumstances surrounding them. If such a person acts as executor, he In a position to more closely approximate the decisions that the estate owner would make if alive, particularly in those situations where the decision can be guided by knowledge of a specific beneficiary's character and abilities. Depending on the surrounding circumstances, beneficiaries may also feel more comfortable dealing with a person whom they might know, as opposed to employees of the corporate executor. However, as previously noted, an individual executor may in some instances be perceived as less impartial than a corporate executor.
Also, the individual may claim a smaller fee for serving as an executor than would a corporate executor. This need not be so, of course, because- the individual executor would have the right to receive compensation determined ion similar grounds as a corporate executor. Savings to the estate, however, would result, for example, if an individual executor, out of personal feelings for the decedent's family, performs his duties gratis, or at a reduced fee; ·If the executor is also a sole beneficiary under the will, the advisability of renouncing his right to the executor's fee will largely depend upon the decedent's estate tax bracket and the respective income tax brackets of the decedent's estate and beneficiary.
Potentially, the most serious disadvantage of selecting an individual to serve as an executor is that the individual may not have the skills or background to adequately and efficiently perform the duties of an executor. This concern may not be relevant if the estate is rather small or the individual has experience in serving in such capacity, and it is further mitigated if the executor is represented by experienced legal counsel. But if particularly complicated problems are anticipated, such as where the executor will have to perform his duties or dispose of a business interest, employing a corporate executor is probably advisable.
Another situation where appointing an individual as executor may be less..desirable is where there is no quali~ed person who is willing to so act. Performance of the duties of executor can entail much work and aggravation for an individual --often without commensurate compensation. Even though an estate owner's surviving spouse or children may: have the abilities necessary to successfully serve as executor, they may nevertheless not want to do so, given the fact that such responsibilities will come at a time of great personal grief and stress. As with the case of nominating any executor, prior to executing his will, the estate owner should ask the potential executor whether he would be willing to serve in that capacity. A discussion of the duties of the office, compensation, and of special problems anticipated should also be discussed with the person.
Corporate and Individual Co-Executors
In certain situations, the planner and his client may believe that the expertise of a corporate executor is vital to the implementation of the estate plan, but they may hesitate to make an appointment because components of the plan require the input ~-from a person with more knowledge of the estate owner's family. If this is so, a corporation and an individual can be named as coexecutors, with each being given authority to make decisions in specified areas. For instance, the corporate executor could be given the authority to manage the estate's investments and the individual executor could be given the authority to determine the manner in which estate distributions are to be made.
In order for the executor to accomplish the objectives of the estate tax plan, he must be granted sufficient administrative powers under the will. If these are not provided, the executor, when facing the necessity of taking an action for which he is not clearly given authorization, must seek the probate court's approval. Seeking approval will ordinarily involve additional delay and administrative expense.
In addition to providing the executor with administrative powers that are broad enough to allow him to carry out his general duties for the decedent's estate, if special situations are anticipated, specific powers necessary to meet special situations, such as operation or sale of a closely held business, should also be granted to the executor.
Upon the estate owner's death, the executor assumes responsibility for a wide variety of duties, including collecting and safeguarding estate assets and their profitability; satisfying claims against the estate; paying income and death taxes; and distributing the assets in accordance with the will.
An error of commission or omission by the executor in fulfilling any of the responsibilities of his office that causes a loss to the estate may result in imposition of personal liability on the executor. Although applicable state law sets the standard of care, i.e., the degree of knowledge and effectiveness against which an executor's actions are to be judged, an estate owner can generally choose by will to provide for a more strict or less strict standard of care.
Thus, if under applicable state law an executor's decisions with respect to estate investments are compared to that of an "ordinary reasonable person dealing with another person's property," the estate owner could provide a less stringent standard of care, such as; "an ordinary reasonable person dealing with his own property."The standard could likewise be made more exacting by requiring the executor's actions to be compared to that of a person having substantial expertise in making investments. The estate owner's choice of the standard of care with which to charge the executor will be influenced by the degree of confidence he has in the person or corporation nominated as executor, and the investment strategy that he wants his estate to pursue. All other factors being equal, the stricter the standard of care that applies to the executor, the more conservative the investments and decisions he will make.
Also, if the estate owner wishes the executor to take any action that may unduly expose the executor to personal liability, or criticism ~om some of the beneficiaries, a will provision, in addition to directing the action, might exculpate the executor ~-from any liability that might arise from that action. For instance, if the estate owner wishes the executor to operate a currently unprofitable (although potentially profitable) family business until his heirs are qualified to do so, the executor should probably be given an assurance in the will that a disgruntled beneficiary could not attack the executor's operation of the asset as an unwise investment. Although the estate owner could probably also avoid the problem by requiring the executor to retain the asset, it might be wise to allow him some leeway to sell~ili case the business's mounting losses outweigh its future profit-making potential.
The estate owner must not only be concerned with whether the plan to reduce federal transfer (estate, gift, and generation-skipping) taxes will leave a sufficient after-tax estate to accomplish his planning goals, but also with the question of estate liquidity--i.e., whether his estate will have the funds to satisfy various estate claims and settlement expenses at the time they fall due.
For the use of "estate freezing" techniques with respect to closely held corporate interests that limit the value of an estate and thereby avoid liquidity problems.
Liquidity Elections: Tax Payment, Tax Deferral, and Valuation. In addition to combating the ill effects of non liquidity by setting aside liquid assets for the estate's use and employing various estate tax planning techniques, the executor has at hand several tax payment, deferral, and valuation elections.
The executor may also be able to reduce the need for liquid assets by postponing payment of a substantial portion of the decedent's federal estate tax liability or by using one of two tax deferral provisions-a 14-year deferral that is available only when an interest in a closely held business comprises a major part of the gross estate, or a l~y~ar deferral that provides for installment payment of estate taxes on the basis of reasonable cause.
Under the l~year deferral rules, an extension can be for a period of up to 10 years
following the general due date for paying the tax. In order to qualify for this deferral,
the executor must be able to show that "reasonable cause" exists for granting
the extension. If reasonable cause exists, the extension is limited to the amount of the
cash shortage.
If the l0-year extension is granted, the IRS may require the executor to furnish security
for payment of the amount for which an extension is granted. The extension does not
prevent the running of statutory interest beginning nine months after the decedent's
death.
Although the l0-year deferral provisions may be available to the decedent's estate, their
applicability to the estate should not be assumed by the estate planner because the IRS
can, within the facts of a specific estate, refuse to grant the extension. While a refusal
can be challenged in court, resort to this remedy would entail additional costs and, until
a decision is made, greater planning uncertainties for the estate. For this reason the
l0-year extension provisions should probably be considered as "last resort"
remedies that may be available if other estate liquidity planning techniques have failed.
Tax planners should not overlook the more limited but potentially more favorable provision that allows them to elect an alternative, 14-year deferral of estate taxes attributable to closely held assets if more than 35 percent of a decedent's adjusted gross estate is an "interest in a closely held business." In such cases, the estate makes an annual payment of interest only in the ~rst five years and thereafter pays the balance in up to 10 installments (the first payment's due date coinciding with the due date for the last payment of interest) of principal and interest.
The attractiveness of this tax benefit is further heightened in that the interest is
payable at a special four percent rate on the estate tax attributable to the first $1
million in value of the closely held business.
Most small businesses will have no trouble qualifying as an "interest in a closely
held business" if the business:
Choice of Asset Valuation Dates
The executor's choice of the date on which to value estate assets for purposes of the estate tax can also reduce the estate's liquidity needs by reducing the amount of the estate tax owed. Assets are valued as of the date of the decedent's death or six months thereafter, if the executor so chooses. Regardless of which valuation date is chosen, all assets (unless previously disposed of by the estate) must be valued as of that date.
Executors may elect to use the alternate valuation date (i.e., the date six months after the decedent's death) only where the election reduces both the value of the decedent's gross estate and the sum of the federal estate tax and generation-skipping transfer tax. Previously, executors could choose to value estate assets as of the alternate valuation date if doing so would result in a higher valuation of the gross estate. By increasing the 'basis of estate assets, this procedure had the effect of decreasing the income tax liability of the estate and beneficiaries. In addition, a larger valuation could allow the estate to qualify for certain tax savings provisions, including installment payment of estate taxes for estates holding farms and other closely held business interests.
Election of the special use valuation for qualifying farm and closely held trade or business real property can also operate to decrease liquidity needs by decreasing estate tax liability.
Estate Planning Team. Estate planning is a complicated process that requires the talents of many specialists. Although the attorney must analyze the legal and tax consequences of every step in the planning process, there are certain responsibilities generally reserved for other experts. In addition to legal counsel, the so-called estate planning team usually consists of an accountant, a corporate trustee, and a:life insurance agent. In some cases, investment counselors, bankers, brokers, and corporate benefit plan administrators also play key roles.
It is important to recognize that, while each member of the team has a certain expertise that will be utilized in creating, executing, and maintaining the plan, their functions overlap. Situations may arise where more than one member of the team is capable of advising the client as to a particular aspect of the plan. If there is a divergence of opinion among members of the team because of their differing perspectives, every effort should be made to reconcile the problem before advising the estate owner. A spirit of cooperation among estate planning team members is necessary in order to create the best possible plan.
Frequently, the life insurance agent is the first member of the team to enter the picture. The life insurance agent is in the business of selling security to individuals who may not have an estate plan, but who are concerned about providing for their families after death. It is often the life insurance agent who initially alerts the individual to problems that may involve bringing in other estate planners. If there is a need;for a plan, it is the life insurance agent who has the greatest knowledge as to the variety of policies available and the proper policy for achieving the ultimate goals of the individual.
In order to provide continuity of service, a corporate trustee or executor may be chosen to manage the affairs of the individual during his lifetime and to administer his property upon his death. Because corporate trustees are in the business of estate planning, they can offer valuable suggestions to the attorney as to the viability of the plan. The corporate trustee also plays a principal role in the administration of the estate, because it is the trustee that, for instance, takes legal title to the property, invests the property, and distributes the property to the beneficiaries in accordance with the trust agreement. Since the trustee's fees ~om such post-death services are generally costs of an estate's administration and, therefore, a potential drain on the estate's resources, they should be weighed and provided for when the estate plan is being created.
Of all the' team members, it is usually the accountant who is in closest touch with the individual's overall financial picture. Frequently, the accountant will be the one to suggest an estate plan. Beyond this, the accountant's expertise in the area of federal income and estate taxation, as well as his ability to project future value and productivity of estate assets, makes him an essential part of the planning team.
Although the estate tax planning process may begin with another member of the team, the attorney oversees all aspects of the planning process. His primary duty is to determine the needs of the individual and to create an estate plan that will fulfill those needs. In so doing, he must work with the other team members and defer to their knowledge where appropriate. The attorney's perspective must be comprehensive, for it is he who coordinates the efforts of the other team members in creating the plan.
Very often, the attorney who has helped engineer the estate plan will also be the attorney representing the estate during probate administration. Like the corporate trustee, therefore, his post-death fees may be payable from the resources of the estate and should be considered, and provided for when creating the estate plan. For example, the client has a right to know the possible drain on his estate from legal costs in the event of probate litigation. This potential problem should underscore to the client the importance of careful estate planning.
Importance of Annual Review. An estate plan is not something that should be drafted, signed and then stored away. Rather, the estate owner (and his advisor(s)) should review the plan as often as the estate owner would review his personal and economic situation. The personal needs of the estate owner and his family change as the years pass, as does the economic situation of the family. Further, inflation may considerably change the value of the estate assets. Tax law changes also may significantly affect the viability of the plan.
An individual also may choose to change the beneficiaries or alter their proportionate shares. Although a will should be flexible enough to provide for future children, the needs of already existing children also may change. Only by means of regular review can these contingencies be accounted for.
Marriage or divorce almost certainly necessitates revamping of an estate plan. Similarly, the death of a beneficiary can create a lapsed legacy if it is not accounted for in the will. It may also be desirable to change the executor or the guardian (in the Case of minor children) because of any number of unforeseeable factors. Again, all of these possibilities must be reflected in an estate plan.
Perhaps the strongest argument in favor of an annual estate plan review is the unified
system of estate and gift tax rates and exclusions.
1. A single unified rate schedule is provided for estate and gift taxes. The rates range
from 18 percent to 55 percent (.05).
2. A single unified credit is used to offset estate and gift tax liability. In 1999, a unified credit of $211,300 (equivalent to an exemption of $650,000) ($202,500 and $625,000 respectively in 1998) applies to offset estate and gift taxes.
For transfers made after 1987, the benefits of the graduated rates and the uni~ed credit under the unified:d transfer tax system are phased out beginning with cumulative transfers rising above $10,000,000.
Under this unified transfer tax system, the amount of gift tax payable is determined by
applying the unified rate schedule to the cumulative lifetime taxable transfers and then
subtracting the taxes paid on the lifetime transfers made for past taxable periods. In
computing cumulative taxable gifts for preceding taxable periods, the donor's taxable
gifts for periods before 1977 are to be taken into account. At the same time, in computing
the tax payable, the reduction for taxes previously paid is based upon the uni~ed rate
schedule even though the gift tax imposed under pre-1977 law may have been less than this
amount. Thus, a donor's previous taxable gifts are only the starting point in determining
the applicable rate and net tax on gifts made after 1976.
For gift tax purposes, the unified tax credit must be applied against any gift tax
liability that arises for gifts made during a calendar year. There is no option to defer
applying the credit-even when its use is not desirable, such as in a net gift situation
(see fi26,O90). The amount of the unified credit that is available for gifts made in any
one year must be reduced by the sum of the allowable credits in previous calendar periods.
However, the allowable credit for any one year cannot exceed the gift tax liability for
that calendar period.
The amount of estate tax is determined by applying the uni~ed rate schedule to the
cumulative lifetime and at-death transfers and then subtracting the gift taxes payable on
the lifetime transfers. The lifetime transfers taken into account in determining
cumulative transfers at death for purposes of imposing the estate tax under the unified
rate schedule include only taxable gifts made after 1976. Correspondingly, the gift tax
paid with respect to gifts made before 1977 is not to be included as part of the tax on
gifts made after 1976.
(a) the date on which the transfer creating the interest in the
disclaimant is made however, regarding disclaimers of
property gifted in joint
tenancy), or
(b) the day on which the disclaimant attains age 21,
4. the disclaimant has not accepted the interest in the property or any of its
benefits, and
5. as a result of the disclaimer, the interest in the property passes without any
direction on the part of the disclaimant either to: