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Quick question about dispersing a trust ???

Portland, OR |

I am executor of my fathers mother and father owned 200 acres together

my mother died 3 years ago and 1 million of my mothers estate was put into a disclaimer trust with my father as trustee and i become trustee when he dies.

Nobody has told me what happens to the trust when he dies....does it go into probate with his will or do I distribute the asset's of the trust at his death to my 4 brothers.
If estate taxes are due can I sell property in the disclaimer trust to pay those taxes or am I required to sell the property that is completely outside the disclaimer trust first that he has held back to himself outside the trust.

Attorney Answers 3


The actions in regards to a trust are determined by the language of the trust. The trust instrument should say what happens upon your father's death.

Trust assets are not probate assets and are not determined by a Will - unless the terms of the trust say that, upon your father's death, the trust should be paid to his estate. Given that the trust sounds like it was formed to keep assets out of his estate to avoid estate taxes, this seems unlikely.

Although trust assets are not probate assets, they may be taxable assets, i.e. considered to be part of your father's estate. Again, this depends on the language of the trust. You may need to meet with an attorney or accountant to make this determination. Many 'disclaimer trusts' pay only income to a surviving spouse, with limited access to principal, in order to meet specific IRS requirements so that the trust assets are not considered to be assets of the surviving spouse's estate. If this is the case with this trust, the trust assets would not be subject to estate taxation. If the trust does not qualify and the trust assets are considered part of your father's estate, his estate will have estate tax liability. In theory, you can use either trust assets or probate assets to pay those taxes - although, again, the trust instrument may have specific language about paying taxes that you need to follow.

I recommend consulting with a professional to make this determination. At the very least, the attorney that drafted the disclaimer trust should be able to help you decipher the trust's language and purpose.

Legal advice depends upon the particular facts of a given situation. Please use my answers as general information but not legal counsel.

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Joanne Reisman

Joanne Reisman


Pretty much in Oregon the only reason for a disclaimer trust is to bypass the surviving spouse's estate and leave the property to the final beneficiaries, the children so it would have been subject to estate tax at the mother's death. You are correct that if the trust was not correctly drafted it might fail to do what it was intended to do, but absent scrivener's error, it would have worked to pass the property to the next beneficiary subject estate tax which would have been zero. (Oregon's estate tax has been at 1 million for a couple of years so that sounds like they aimed for this tax free amount.)


The disclaimer trust is normally established by a provision in a will although it could be a separate document. So you need to find your mother's will and read it. It will dictate how the property is to distributed after your dad's death. Typically a disclaimer trust makes the property available to the surviving spouse for their "health, maintenance and support" so they can use the money subject to this purpose until they die, then the balance in the trust goes to named beneficiaries, usually adult children once the second spouse dies.

The property in the disclaimer trust should not need to be probated - it already was probated when your mother died and it should not have any more estate tax related to it - it technically was left to the final beneficiaries when your mother died but just was held up getting delivered until after your dad died. So it was subject to estate tax when your mother died. My guess is that they picked the $1 million amount to disclaim because that way there was no estate tax owed. But it was taxed - just the tax due was "0".

Since your mother and father both owned the 200 acres, your father probably still owns his share of the 200 acres plus any share of you mom's that went to your father and was not disclaimed. This portion that was still held by your father may or may not need to be probated. If it was just in your father's name probate may be needed to transfer the title. It could also be subject to estate tax, whether or not you do a probate.

What ever share went to your father and not into the disclaimer trust could generate estate tax being due if the property value is high enough. In 2012 the Federal Federal estate tax kicks in on estates greater than $5 million and Oregon estate tax kicks in at 1 million. There are special laws in Oregon that protect natural resources which can include family farms and will prevent you from owing estate taxes for qualifying properties. This law was passed to deal make it possible for families to hold onto land and not have to sell the land to pay estate taxes.

The law is new and complex so you really need to see an estate tax specialist that know about this law and you will probably need to get the property appraised so you know the value. So if this 200 acres is farm land or other natural land it might qualify for special rules that will help you avoid paying estate tax if you hang on to the land and don't sell it. Bottom line you might not owe estate tax even if the property exposed to tax has a value is over $1,000.000 if the property qualifies for the special tax exemption.

You do need to consult with a lawyer to figure this out.

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Quite simply the language of the disclaimer trust will determine the answers to your questions. It will contain provisions as to what happens to the trust after his death and it will deal with any taxes due. If this is a disclaimer trust that was used to take advantage of mom's unified credit then there should be no estate taxes due at his death.
Get with an estates attorney to assist you with the administration and tax issues involved with the estate and the trust. Do not do this on your own.

Hope this helps.

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Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is , his website for more tax, estate and business articles is and his blog is

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is , his website is and his blog is <> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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