[WSBAPT] IRA/community property/probate question
John J. Sullivan
sullaw at comcast.net
Fri Jan 9 15:29:57 PST 2015
That's the one about the nonparticipant deceased spouse owning s CP interest.
John Sullivan
Sent from my iPhone
> On Jan 9, 2015, at 3:24 PM, Mark Higgins <markthiggins at gmail.com> wrote:
>
> Dale--here are some nearly incomprehensible statutes you may not be aware of. I wasn't. They may not even apply:
>
> RCW 6.15.020(4), (6)
> (4) For the purposes of this section, the term "employee benefit plan" means any plan or arrangement that is described in RCW 49.64.020, including any Keogh plan, whether funded by a trust or by an annuity contract, and in 26 U.S.C. Sec. 401(a) or 403(a) of the internal revenue code of 1986, as amended; or that is a tax-sheltered annuity or a custodial account described in section 403(b) of such code or an individual retirement account or an individual retirement annuity described in section 408 of such code; or a Roth individual retirement account described in section 408A of such code; or a medical savings account or a health savings account described in sections 220 and 223, respectively, of such code; or a retirement bond described in section 409 of such code as in effect before January 1, 1984. The term "employee benefit plan" shall not include any employee benefit plan that is established or maintained for its employees by the government of the United States, by the state of Washington under chapter 2.10, 2.12, 41.26, 41.32, 41.34, 41.35, 41.37, 41.40, or 43.43 RCW or RCW 41.50.770, or by any agency or instrumentality of the government of the United States.
>
> (6) Unless prohibited by federal law, nothing contained in subsection (3), (4), or (5) of this section shall be construed as a termination or limitation of a spouse's community property interest in an employee benefit plan held in the name of or on account of the other spouse, who is the participant or the account holder spouse. Unless prohibited by applicable federal law, at the death of the nonparticipant, nonaccount holder spouse, the nonparticipant, nonaccount holder spouse may transfer or distribute the community property interest of the nonparticipant, nonaccount holder spouse in the participant or account holder spouse's employee benefit plan to the nonparticipant, nonaccount holder spouse's estate, testamentary trust, inter vivos trust, or other successor or successors pursuant to the last will of the nonparticipant, nonaccount holder spouse or the law of intestate succession, and that distributee may, but shall not be required to, obtain an order of a court of competent jurisdiction, including a nonjudicial binding agreement or order entered under chapter 11.96A RCW, to confirm the distribution. For purposes of subsection (3) of this section, the distributee of the nonparticipant, nonaccount holder spouse's community property interest in an employee benefit plan shall be considered a person entitled to the full protection of subsection (3) of this section. The nonparticipant, nonaccount holder spouse's consent to a beneficiary designation by the participant or account holder spouse with respect to an employee benefit plan shall not, absent clear and convincing evidence to the contrary, be deemed a release, gift, relinquishment, termination, limitation, or transfer of the nonparticipant, nonaccount holder spouse's community property interest in an employee benefit plan. For purposes of this subsection, the term "nonparticipant, nonaccount holder spouse" means the spouse of the person who is a participant in an employee benefit plan or in whose name an individual retirement account is maintained. As used in this subsection, an order of a court of competent jurisdiction entered under chapter 11.96A RCW includes an agreement, as that term is used under RCW 11.96A.220.
>
>
>> On Fri, Jan 9, 2015 at 2:35 PM, Dale Young <lowelldaleyoung at msn.com> wrote:
>> Listmates, here's one to get you reaching for your old copy of Harry Cross' Community Property law review article.
>>
>> It's the classic stepmother vs. child from the first marriage.
>>
>> Client is named as beneficiary of her recently deceased father's IRA account (incidentally she is also named as the PR in his will and is
>> his sole heir in the will to all of this property).
>>
>> The father's surviving spouse (the client's stepmother) is also claiming the entire IRA account.
>>
>> The IRA was opened after his marriage to the stepmother, but the source of the funds can be traced to reveal it was about 15% separate funds and 85% community funds. (by the way the funds came from an 40lk rolled over into the IRA, which 40lk was 85%/15% community vs. separate funds)
>>
>> The IRA beneficiary form says if a community property state is involved then the form naming someone other than surviving spouse as a beneficiary has to have been signed by the surviving spouse. The surviving spouse had refused to sign as of the date of death.
>> .
>> RCW 26.16.030 provides in part:
>> (1) Neither person shall devise or bequeath by will more than one-half of the community property.
>>
>> (2) Neither person shall give community property without the express or implied consent of the other.
>>
>>
>> My view of community property is that each spouse owns half, unless an agreement or court says otherwise, so in a person's will they can leave their 1/2 of community property to whomever they choose.
>>
>> However, an IRA is a nonprobate asset, not normally controlled by a will (unless it is a superwill, which this is not).
>>
>> My conclusion is that the surviving spouse gets 100% of the community property portion of the account because the will has no effect upon the nonprobate asset. And, the beneficiary designation for the IRA account to his daughter cannot control the community property portion of the IRA account.
>>
>> Therefore, the answer on who gets the money is just an accounting exercise to establish (1) what % of the invested funds were separate funds and (2) how much the current balance is the earnings and accumulations on the separate portion and how much on the community portion??
>>
>> Thus, the lions share of the account goes to the surviving spouse and the much smaller portion goes to the daughter?
>>
>> Am I right so far??
>>
>> Any comments would help.
>>
>> Thanks,
>>
>> Dale Young
>>
>> Lowell Dale Young, LLC From Real Estate to Your Estate
>> Lowell Dale Young Advice to Real Estate Buyers & Sellers
>> Attorney At Law Wills, Trusts, Estate Planning
>> 119 First Ave S. #200 Probate and Avoiding Probate
>> Seattle, WA
>>
>> Mailing address:
>> P.O. Box 25510
>> Seattle, WA 98165
>> Phone: 206-364-0200
>> Fax: 206-363-0663
>> Website: www.ldyounglaw.com
>>
>>
>>
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>
>
>
> --
> Mark T. Higgins
> Mark T. Higgins, P.C.
> P.O. Box 57
> Darrington, WA 98241
> 206-491-2420
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