T&E Litigation Update: Breakiron v. Gudonis

In Breakiron v. Gudonis, Case No. 09-10427-RWZ, 2010 U.S. Dist. LEXIS 80888 (Aug. 10, 2010), the United States District Court for the District of Massachusetts addressed issues concerning the disclaimer of an interest in a trust.

The plaintiff's parents established two qualified personal residence trusts (QPRT) for their one-half interests in their Nantucket property. At the expiration of the ten-year term of the QPRTs, the property passed to the plaintiff and his sister as tenants in common. The plaintiff then consulted with an attorney about the proper way to transfer his interest to his sister while incurring the lowest possible transfer tax. The attorney told the plaintiff to disclaim his interest in the QPRTs, incorrectly advising him that the disclaimers would be valid if executed within nine months after the expiration of the term of the QPRTs, rather than within nine months after the creation of the QPRTs.