5.2 Power of Attorney With the Ability to Disclaim
Due to the requirements of the IRC § 2518, of course, a power of appointment should not be included in the disclaimer trust. Also to hedge against the possibility that the survivor could be incompetent, a power of attorney with the ability to disclaim should be provided.
5.2.1 This approach protects clients from creditors of only one of the spouses. If, at death, there is no such creditor, the credit shelter trust is “triggered” by the survivor disclaiming all or part of the survivorship interest in the entireties property. If, on the other hand, the debtor spouse dies first, no disclaimer is made and the property passes debt-free to the survivor. If the non-debtor spouse dies first, a disclaimer should permit the survivorship interest to pass to a spendthrift trust for the benefit of the debtor spouse. In that event, it is important that the debtor spouse is not his or her own trustee.