[WSBAPT] Community Property- probate question

[Donna Calf Robe]

Greetings:

 

Facts and legal assumptions: PR is surviving spouse with non-intervention
powers.  A PR with non-interventions powers can make non-pro rata
distributions of property from an estate.  A PR also administers the
community property.  However, Washington follows the “item theory” of
community property, where each spouse is treated as owning a half interest
in each community asset (rather than the “aggregate theory” where each
spouse owns an undivided interest in the community as a whole, which
allows for a non-pro rata division of community property.)  In present
case, much of community assets are retirement accounts (primarily IRAs in
PR/H’s name).  PR wants to allocate non-retirement CP account assets to
estate and IRAs to himself.  Estate assets will pass to spousal trust.
According to the probate deskbook (citing to Carrieres v. Comm’r) a
non-pro rata distribution of community property between SS and estate
should not result in a taxable exchange.        

 

Question  1: So H can allocate his ½ interest in non-retirement account to
estate, in exchange for retaining full interest in retirement account in
his name (of equal value) and then entire non-retirement account can pass
to trust, correct? 

 

Question 2: I read a suggestion that a better option (for the future use)
is to have testator include power in Will that PR can make non-prorate
distributions and use aggregate method in distribution of CP, and say that
to the extent possible, the decedent’s interest in the surviving spouses
IRA should be allocated to SS in any non-prorata distribution.  Are others
including this language in their Wills, when appropriate?

 

Thanks,

 

Donna

 

Donna M. Calf Robe

Attorney at Law

2722 Eastlake Ave. E., Ste. 200

Seattle, Washington 98102-3143

Phone (206) 324-4300, extension 113

FAX (206) 324-3106

 

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