[WSBAPT] One spouse's IRA as community property - distribute nonparticipant interest to credit trust for surviving spouse (title owner of IRA)

[Ralph Maimon]

Thanks all for the sage advice.  I assumed because it was earned during the marriage, it was community property. Not sure how I missed the statute - but it is in a strange place, out of context but glad it is there.

I am planning to fund the credit trust with the nonparticipating spouse’s community interest in the IRA. That is the substantial and primary asset of the participant’s assets. There will have to be a name change for that half with TIAA.  If I did a TEDRA, I assume that TIAA would have to sign as well?  Thoughts appreciated, especially if anyone has been down this road.

Ralph Maimon
LAW OFFICE OF RALPH MAIMON, P.S.
2811 E. Madison Street, Suite 202
Seattle, WA 98112
(206) 323-0911 Office
(206) 462 1505  Fax
rmaimon at maimonlaw.com<mailto:rmaimon at maimonlaw.com>
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John J. Sullivan
Sent: Thursday, January 25, 2018 6:59 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] One spouse's IRA as community property?

Jared:

It’s been almost 20 years since I researched this, but my recollection is yes, the residuary clause applies. I’ll see if I can find it tomorrow.

The problem is I’ve never known an IRA custodian who will go along with it.

John Sullivan
Sent from my iPad

On Jan 25, 2018, at 4:41 PM, Jared E. Adams <jared at condieadams.com<mailto:jared at condieadams.com>> wrote:
Hi John,

Thanks for responding and including the reference to RCW 6.15.020(6)! I’m interested in your additional thoughts and the thoughts of other on this issue.

The RCW you cited provides “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.”

I find the language that the spouse may transfer or distribute his or her CP interest somewhat ambiguous. If the deceased spouse’s Will states he or she specifically gives his or her CP interest in the IRA to someone, I think the gift is clearly valid and enforceable under the statute. But, if the spouse simply gives his or her residuary estate to a trust (or someone else), does that really control the disposition of half the surviving spouse’s IRA?

In other words, I agree the nonparticipant spouse has the right to give half the IRA, but I don’t know that a residuary clause in the Will exercises that right.

Does anyone know of any cases on point?  I’m happy to be wrong, and I’d love to learn from others’ experiences on this.

Thanks,

Jared


Jared E. Adams, JD, LL.M.

Condie & Adams, PLLC
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Unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John J. Sullivan
Sent: Thursday, January 25, 2018 4:17 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] One spouse's IRA as community property?

Ralph:

I’ve dealt with this situation numerous times.

Assuming the IRA is CP, the non-participant’s will disposes of her interest. See RCW 6.15.020(6). Odd placement. Odd provision.

Usually it’s highly undesirable to force distribution of the IRA. What I usually do is have the survivor issue a promissory note to the CST if it’s important to find it.

John Sullivan
Sent from my iPhone

On Jan 25, 2018, at 3:27 PM, Jared E. Adams <jared at condieadams.com<mailto:jared at condieadams.com>> wrote:
<image001.jpg>
I agree one-half of the IRA would be included in her “gross estate” for estate tax purposes. But, would one-half of the IRA be included in her probate estate, and subject to disposition under her Will? Characterizing the asset as community property doesn’t necessarily make it subject to probate.

Jared


Jared E. Adams, JD, LL.M.

Condie & Adams, PLLC
611 4th Avenue, Suite A
Kirkland, WA  98033
(voice):  (425) 450-1040
(fax):  (425) 450-1041
(email): jared at condieadams.com<mailto:jared at condieadams.com>
(web): www.condieadams.com<https://urldefense.proofpoint.com/v2/url?u=http-3A__www.condieadams.com_&d=DwMFaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=48uCzqbn0A0fuu0Vx7HiXuyvQSYkBeVAtLY41jGTlHo&m=wQC-g3MkizNjsYHXghLWQup3j4SFvg57qSE9SJ-ILDo&s=o2f7BdzA6FZrRTQ2tS270lUrHATwe68gLsPrjLxBQd0&e=>

Unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

PLEASE READ THIS ENTIRE DISCLAIMER
This message is from the Law Office of CONDIE & ADAMS, PLLC, and is intended only for the addressee.  The information contained in this message is privileged, confidential, and protected by the attorney-client or attorney work product privileges.  Unauthorized forwarding, printing, copying, distribution, disclosure or use of such information is strictly prohibited.  If you are not the addressee, please promptly delete this message and notify the sender of the delivery error by return e-mail or you may call our office at (425) 450-1040. Nothing in this message should be interpreted as a digital or electronic signature that can be used to authenticate a contract or other legal document.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John Creahan
Sent: Thursday, January 25, 2018 3:04 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] One spouse's IRA as community property?

Hi Ralph,
The IRA funds are presumed to be community property, assuming the were earned during marriage, and one half would be includible in her estate. Titling in one spouse’s name is irrelevant to determining whether the account is community.
Are you thinking about possibly funding the credit trust with the IRA assets?
Hope this helps,
John


John Creahan
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Ralph Maimon
Sent: Thursday, January 25, 2018 2:09 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] One spouse's IRA as community property?

Folks

My client’s wife died.  We are probating her will. There is a credit trust.  The great bulk of the  estate is in the husband’s IRA with TIAA.  Any thoughts as to whether the TIAA account would be considered community property, whereby half of its value can be considered part of her estate?

Ralph Maimon
LAW OFFICE OF RALPH MAIMON, P.S.
2811 E. Madison Street, Suite 202
Seattle, WA 98112
(206) 323-0911 Office
(206) 462 1505  Fax
rmaimon at maimonlaw.com<mailto:rmaimon at maimonlaw.com>
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