The trust document has a provision for three trusts to be formed.  Since the decedent died in 2008 and one half of the trust estate is 1.4 million, there are not enough assets to fund a QTIP Trust.  The surviving spouse wanted to max the credit trust out if possible.  We may have misinterpreted the trust document in trying to fully fund the credit trust.

The Trust Document has the following clause:

Right of Surviving Spouse to Disclaim Part of Survivor's Survivor's Trust - If the Surviving Spouse effectively disclaims his or her entire beneficial interest in the income, or in the principal, or in both the income and principal of the assets of the Deceased Spouse transferred to the Survivor's Trust, or an undivided portion of such interest or interests, then, to the extent of the disclaimer, the property subject to such interest or interests, or such undivided portion thereof, shall become part of the Tax Free Trust (credit trust) and shall be disposed of in accordance with its provisions.  The words "effectively disclaims", as used in this Paragraph shall mean the making of a disclaimer which meets and satisfies the requirements of Internal Revenue Code Section 2518, as amended.

We had the surviving spouse disclaim part of his community property assets allocated to the survivor's trust.

An attorney who was going to transfer title of the house over to the credit trust, says she doesn't believe a survivor can disclaim his or her own trust assets.  She went on to say that she consulted four other tax attorneys, who believed the same.

I know in a CPE seminar several years ago that the attorney said a survivor can disclaim their own property in a survivor's trust if it is within nine months of the date of death of the deceased spouse.  I'm not talking about disclaiming income that may be coming from one of the decedent's trusts or principal from a 5 and 5 provision, but outright assets in the survivor's trust.

I'm having difficulty in finding anything in my research that backs my point up.

I did however find the following passage from a book titled "How to Settle Your Living Trust" by Henry W. Abts III.

The following excerpt is from his book:

Filling the Decedent's B Sub-Trust

I am often asked if the surviving spouse can increase the asset value in the decedent's B sub-trust (e.g. by adding some of the surviving spouse's assets to the decedent's sub-trust) in order to fully utilize the decedent's federal estate tax exemption.  The quick answer is no, but let me explain an exception to this pat answer.

For example, let's assume an estate of $800,000.  Let's further assume that the assets are all marital assets (i.e. community property); one-half of the assets ($400,000) would flow into the survivor's A sub-trust and the other half of the assets would flow into the decedent's B sub-trust.

As you can see, the normal allocation (half of the assets going into each sub-trust) does not fully utilize the decedent's federal estate tax exemption of $600,000.  Unfortunately, a surviving spouse may not gift assets to a decedent spouse.  However, the surviving spouse may disclaim a part of the survivor's estate, as described in the next section.  In this manner, and in this manner only, the surviving spouse could transfer assets from the survivor's A sub-trust to the decedent's B sub-trust.  Remember, however, that this arrangement is best suited for couples who are not involved in a second marriage.

Disclaiming an Interest in Assets

Upon the death of the first spouse, the surviving spouse may disclaim an interest in part of his or her assets and pass the disclaimed assets to the decedent's B sub-trust and/or C sub-trust.  The disclaimer must be made within nine months from the date of death of the first spouse, and it must be made before the disclaimant receives any income whatsoever from the asset to be disclaimed.  The surviving spouse, as the trustee and beneficiary of the decedent's B sub-trust, retains full rights to use or sell his or her disclaimed assets.

http://books.google.com/books?id=2a-I_6eoblEC&pg=PA223&lpg=PA223&dq=disclaim+survivor's+assets&source=bl&ots=eaT-uKETp3&sig=MhQu0e4d46S8V37rgyDyGl3LUXU&hl=en&ei=2-PxSvvoBo2qtgOoyYX4AQ&sa=X&oi=book_result&ct=result&resnum=4&ved=0CBEQ6AEwAw#v=onepage&q=disclaim%20survivor's%20assets&f=false

We disclaimed part of the survivor's assets and funded the 2 million dollar home to the credit trust.  Of course there was no income received from this asset within the nine month period after death.

Is the author wrong about this, or am I misreading what he wrote?  There are no references or footnotes listed in the passage to give back up to what he has stated.

Any help would be appreciated.