Sep 1, 2005 12:00 PM, By Elyse G. Kirschner, counsel, Weil, Gotshal & Manges LLP, New York

By: By Elyse G. Kirschner, counsel, Weil, Gotshal & Manges LLP, New York

Residuary bequests to private foundations are a common form of charitable giving. Typically, a testator's will provides for certain bequests to individuals, and designates a private foundation as a beneficiary of all or a portion of his residuary estate. The advantages of residuary bequests to charity are well-known: The testator's estate is eligible for a charitable deduction, and, if the recipient foundation was created by the testator or a family member during the testator's lifetime or under the will itself, members of the testator's family can retain control over the administration and distribution of foundation assets.

The disclaimer is also a popular tax-planning tool. It's used to provide flexibility and correct mistakes in an estate plan. Expect disclaimers to play an ever more important role in estate planning to cope with changing estate tax rates, estate tax credit amounts and generation-skipping transfer (GST) tax exemption amounts. As estate tax credit amounts increase, for example, a surviving spouse might be more likely to disclaim as part of a post-mortem estate plan, resulting in lower estate tax brackets and passage of more assets to her heirs.

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