[WSBAPT] Family Support versus additional exempt assets; counting of community property?

Tue Sep 15 17:04:15 PDT 2015

Eric

I have always taken this “exempt property” reference to apply to assets normally exempt from creditors’ claims. If there is a ½ million dollar life insurance, exempt from creditors, it is not likely that you will be successful in claiming a Family Support Award.

I am open to being told I am wrong, but have disclosed to the Court the existence of Qualified Retirement and Life Insurance assets that are non-probate and already going to the surviving spouse or others (kids).

Heather

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Tuesday, September 15, 2015 4:36 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Family Support versus additional exempt assets; counting of community property?

Thanks Paul--I think I haven't phrased my question #2 very well.

RCW 11.54.080 appears to address only "exempt property" that is "held" by a claimant. What does that mean? Are we talking about decedent's property that is in a claimant's possession? Or maybe, if the decedent's estate totals less than $125,000, the claimant can include some of their own property as exempt? (But that makes no sense because an heir's property isn't subject to decedent's debts anyway.) But if it only applies to decedent's property, why the clause limiting application of the statute to a claimant who "holds exempt property"?

And why is it "exempt" property? The statute simultaneously appears to be the procedure for making additional property exempt, but also implies that the procedure can only apply to property is already exempt in some other way?

Is it intended to allow claimants to apply more than once, to make more of decedent's property exempt, if the first order didn't exempt a full $125,000 in value? But when would that ever happen--why wouldn't someone take care of it on the first petition? And even if that is the purpose of .080, why on earth is the procedure so elaborate? I would think that issue could be addressed by a single line, allowing multiple petitions by multiple claimants so long as the total of all exempted property does not exceed $125,000.

Can you tell I am deeply confused by this statute...

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA  98101-2837
phone 206-625-0092
fax 206-625-9040

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Paul Grant
Sent: Tuesday, September 15, 2015 4:10 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Family Support versus additional exempt assets; counting of community property?

Eric,
My reading of the statute for the issues you presented:  #1 - I agree with your interpretation that the $125 is only talking about a decedent's portion of c/p or separate property.  If the surviving spouse has $500k in separate property it is not the decedent's, so the exemption applies to only the decedent's estate, and for that matter, only the probateable estate.  Also, half of the c/p is considered the surviving spouse's and should not be reflected in the $125 calculation; I have calculated the entire c/p value then halved the amount and have been successful in courts accepting this interpretation in awarding the exemption.  A consideration under 11.54.050 is for a creditor to claim that there are nonprobate assets sufficient to the survivor and therefore a reduction should be applied to the presumption.
Question #2 in my opinion is simply telling us what the exemption amount is... no where in 11.54 is the ceiling exemption expressed.  It is a horrible reference but 6.13.030 is only pulling the exemption amount to the homestead statute.  It is an aggregate amount so the combination of real, personal, investment, etc is all combined to reflect the exempt amount (I find Mike accurately states whether it is c/p or separate prop).  However, there is an opportunity to seek an increased award, so just like a creditor can seek for a reduction so the petition can seek for an increase.
That is my humble interpretation - hope my rambling assists

Paul H. Grant - JD, LL.M

Planning with Purpose, Inc
Lynnwood, WA 98036
425-939-9948
www.planningwithpurposeinc.com<http://www.planningwithpurposeinc.com>

Estate Planning. Business Planning. Wealth Succession.

On Tue, Sep 15, 2015 at 2:21 PM, Eric Nelsen <Eric at sayrelawoffices.com<mailto:Eric at sayrelawoffices.com>> wrote:
I'm having trouble figuring out exactly what assets count toward the family support award, and also what the heck is covered by RCW 11.54.080<http://app.leg.wa.gov/rcw/default.aspx?cite=11.54&full=true#11.54.080> re "additional exempt assets."

I get that the basic family support award is $125,000, and the assets awarded are exempt from all other claims against the estate (except secured creditors).

First question: The award also protects the survivor's half of community property, not just the half owned by the decedent. RCW 11.54.070(2)<http://app.leg.wa.gov/rcw/default.aspx?cite=11.54&full=true#11.54.070>. Does the survivor's half interest count toward the $125,000, or is the survivor's half in addition to $125,000 inherited from the deceased spouse's estate? RCW 11.54.010(1)<http://app.leg.wa.gov/rcw/default.aspx?cite=11.54&full=true#11.54.010> says the award is from the "property of the decedent." To me, that means $125,000 from the decedent's half of community property, and then the survivor's half is also protected even though that means more than $125,000 is ultimately protected. Am I being piggy?

Second question: What the heck kind of assets can be protected as "additional exempt assets" under RCW 11.54.080<http://app.leg.wa.gov/rcw/default.aspx?cite=11.54&full=true#11.54.080>? Subsec (1) says "This section applies if the party entitled to petition for an award holds exempt property that is in an aggregate amount less than [$125,000]." What does "exempt property" even mean in this statute? It's undefined in RCW 11.54 and trying to import the meaning of "exempt" from RCW 6.13 or RCW 6.15 doesn't seem to make sense. I don't think it means the survivor's half of community property, because that appears to already be protected under the general award. Section .080 also suggests that a child of decedent could be holding "exempt property"--but what could a decedent's child be holding that the parent's creditors could possibly affect, unless it's already an asset of the estate?

I have a suspicion I'm making this too complicated, but can't seem to find my way out. Any sage advice out there?

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA  98101-2837
phone 206-625-0092<tel:206-625-0092>
fax 206-625-9040<tel:206-625-9040>

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