If a holder disclaims a power of appointment or other power not held in a fiduciary capacity, the following rules apply:

A. If the holder has not exercised the power, the disclaimer takes effect as of the time the instrument creating the power becomes irrevocable.

B. If the holder has exercised the power and the disclaimer is of a power other than a presently exercisable general power of appointment, the disclaimer takes effect immediately after the last exercise of the power.

C. The instrument creating the power is construed as if the power expired when the disclaimer became effective.

History: Laws 2001, ch. 290, § 9; 1978 Comp., § 46-10-9 recompiled as § 45-2-1109 by Laws 2011, ch. 124, § 101.

Recompilations. — Laws 2011, ch. 124, § 101 recompiled former 46-10-9 NMSA 1978 as 45-2-1109 NMSA 1978, effective January 1, 2012.

COMMENT

Section 2-1105(a) [45-2-1105 NMSA 1978] authorizes a person to disclaim an interest in or power over property. Section 2-1109 [45-2-1109 NMSA 1978] provides rules for disclaimers of powers which are not held in a fiduciary capacity. The most common non-fiduciary power is a power of appointment. Section 2-1105(a) also authorizes the partial disclaimer of a power as well as of an interest. For example, the disclaimer could be of a portion of the power to appoint one's self, while retaining the right to appoint to others. The effect of a disclaimer of a power under Section 2-1109 depends on whether or not the holder has exercised the power and on what sort of power is held. If a holder disclaims a power before exercising it, the power expires and can never be exercised. If the power has been exercised, the power is construed as having expired immediately after its last exercise by the holder. The disclaimer affects only the holder of the power and will not affect other aspects of the power.

Example 1. T creates a testamentary trust to pay the income to A for life, remainder as A shall appoint by will among her descendants living at A's death and four named charities. If A does not exercise her power, the remainder passes to her descendants living at her death by representation. A disclaims the power. The power can no longer be exercised and on A's death the remainder will pass to the takers in default.