[WSBAPT] Tax or property law?

[vivenziolaw at rockisland.com]

Colleagues,

I have a new-to-me question I'd appreciate some guidance with:

We are getting ready to fund exemption and marital deduction trusts
created in a will.

The Decedent and spouse-to-be signed a prenuptial agreement in 1984.  It
contained
the usual protections of separate property, the husband being wealthier
than the
wife.

In 1988, H formed an LLC, himself its only member, and bought a piece of
property.

In 1997, H had already married W, and H had a will drawn which referenced
the prenup
and mentioned the property as his separate property, and stated any
proceeds of a
later sale would be H's separate property. The will created exemption and
marital
deduction trusts, wife being trustee.

10 years later, in 2007, H sold the property, and deposited the proceeds
in a "joint
tenancy with right of survivorship" brokerage account.  H died in 2013.

The question is: Are the proceeds in that account now considered community
property
for the purpose of funding either of the described trusts, considering tax
law?  Or,
do we follow marital and property law and say that when H deposited the
proceeds
into the JTWROS account, he took an affirmative step that transferred
title to what
had been his separate funds to his wife, each JTWROS in property law being
deemed to
own the entire account, with ownership passing to the survivor.  Thus,
these
particular funds would be the wife's and so not subject to will language
making
husband's half of community property and all his separate property the
source of
funding the trusts.  H's estate contains other ample assets to fund the
trusts.

Which is it?

Thank you for whatever thoughts you have!




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