[WSBAPT] 11.18.200 - liability of nonprobate assets for estate debts, admin, and taxes

Sun Aug 25 15:01:28 PDT 2019

RCW 11.18.200<http://app.leg.wa.gov/RCW/default.aspx?cite=11.18.200>
Liability of beneficiary of nonprobate asset—Abatement.
(1) Unless expressly exempted by statute, a beneficiary of a nonprobate asset that was subject to satisfaction of the decedent's general liabilities immediately before the decedent's death takes the asset subject to liabilities, claims, estate taxes, and the fair share of expenses of administration reasonably incurred by the personal representative in the transfer of or administration upon the asset. The beneficiary of such an asset is liable to account to the personal representative to the extent necessary to satisfy liabilities, claims, the asset's fair share of expenses of administration, and the asset's share of any applicable estate taxes under chapter 83.110A<http://app.leg.wa.gov/RCW/default.aspx?cite=83.110A> RCW. Before making demand that a beneficiary of a nonprobate asset account to the personal representative, the personal representative must give notice to the beneficiary, in the manner provided in chapter 11.96A<http://app.leg.wa.gov/RCW/default.aspx?cite=11.96A> RCW, that the beneficiary is liable to account under this section.

Also, look at RCW 11.10 Chapter.

RCW 11.10.010<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.010>
Abatement—Generally.
(1) Except as provided in subsection (2) of this section, property of a decedent abates, without preference as between real and personal property, in the following order:
(a) Intestate property;
(b) Residuary gifts;
(c) General gifts;
(d) Specific gifts.
For purposes of abatement a demonstrative gift, defined as a general gift charged on any specific property or fund, is deemed a specific gift to the extent of the value of the property or fund on which it is charged, and a general gift to the extent of a failure or insufficiency of that property or fund. Abatement within each classification is in proportion to the amounts of property each of the beneficiaries would have received if full distribution of the property had been made in accordance with the terms of the will.
(2) If the will expresses an order of abatement, or if the testamentary plan or the express or implied purpose of the devise would be defeated by the order of abatement stated in subsection (1) of this section, a gift abates as may be found necessary to give effect to the intention of the testator.
(3) If the subject of a preferred gift is sold, diminished, or exhausted incident to administration, not including satisfaction of debts or liabilities according to their community or separate status under RCW 11.10.030<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.030>, abatement must be achieved by appropriate adjustments in, or contribution from, other interests in the remaining assets.
(4) To the extent that the whole of the community property is subject to abatement, the shares of the decedent and of the surviving spouse or surviving domestic partner in the community property abate equally.
(5) If required under RCW 11.10.040<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.040>, nonprobate assets must abate with those disposed of under the will and passing by intestacy.

RCW 11.10.040<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.040>
Nonprobate assets.
(1) If abatement is necessary among takers of a nonprobate asset, the court shall adopt the abatement order and limitations set out in RCW 11.10.010<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.010>, 11.10.020<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.020>, and 11.10.030<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.030>, assigning categories in accordance with subsection (2) of this section.
(2) A nonprobate transfer must be categorized for purposes of abatement, within the list of priorities set out in RCW 11.10.010<http://app.leg.wa.gov/RCW/default.aspx?cite=11.10.010>(1), as follows:
(a) All nonprobate forms of transfer under which an identifiable nonprobate asset passes to a beneficiary or beneficiaries on the event of the decedent's death, such as, but not limited to, joint tenancies and payable-on-death accounts, are categorized as specific bequests.
(b) With respect to all other interests passing under nonprobate forms of transfer, each must be categorized in the manner that is most closely comparable to the nature of the transfer of that interest.
(3) If and to the extent that a nonprobate asset is subject to the same obligations as are assets disposed of under the decedent's will, the nonprobate assets abate ratably with the probate assets, within the categories set out in subsection (2) of this section.
(4) If the nonprobate instrument of transfer or the decedent's will expresses a different order of abatement, or if the decedent's overall dispositive plan or the express or implied purpose of the transfer would be defeated by the order of abatement stated in subsections (1) through (3) of this section, the nonprobate assets abate as may be found necessary to give effect to the intention of the decedent.

Dalynne Singleton

Gourley Law Group
Snohomish Escrow
The Exchange Connection
1002 10th Street / PO Box 1091
Snohomish, WA 98291

360.568.5065
360.329.4079
360.568.8092  fax
dalynne at glgmail.com<mailto:dalynne at glgmail.com>

LICENSED IN WASHINGTON AND OREGON
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Mark Mullins
Sent: Saturday, August 24, 2019 4:23 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] 11.18.200 - liability of nonprobate assets for estate debts, admin, and taxes

Dear Listmates:

  1.  I had a nominated oldest adult child PR call me for help with a single parent death with the estate left to largely be transferred as nonprobate assets, but where estate and transfer taxes may be due because of the size of the estate (over $2.2kk).
  2.  I thought I had once seen a statute for notice to entities holding non-probate assets advising them of the liability of such assets for estate administration, debts, and estate tax liabilities.
  3.   From my research today, I think that is (no longer) true, if it ever was.
  4.  All I find is RCW 11.18.200 listing non-probate assets, the beneficiary(ies) of which, are liable for such costs from such assets.
  5.  I had also thought there was some kind of time frame provided by statute for notice to entities holding such assets, after which such entities would have no liability for distribution to the named beneficiary (under survivorship, POD, or TOD).
  6.  Am I wrong about #1?
  7.  Am I wrong about #2?
  8.  Am I wrong about #3?
  9.  Am I wrong about #5?
  10. Is there a simple way to keep the horse (relevant non-probate asset) in the barn (the hands of an entity holding it before transfer to the named survivor or beneficiary or the survivor/beneficiary him/herself who already got it)?
  11. (a) Other than withholding or reducing a beneficiary/transferee's distribution share for the appropriate amount (if there is enough in such share), (b) can you avoid estate liability for the amount for which the nonprobate asset should be subject by directing the taxing authority or other creditor to the entity or beneficiary of the nonprobate asset?
  12. Since I doubt #11 (b) is at all practicable, if even possible, this seems a massive hole in the justice of the overall legal structure for disposition of a decedent's estate.  Am I wrong?
  13. I would welcome any form notices and letters people have found effective in addressing or resolving this problem, especially a notice meeting the requirements of 11.18.200(1) and 11.96A. The notice draft I've come up with is substantially a restatement of most of 11.18.200(1) and (2), and if that is what you use, I am probably already set on that issue.

Sincerely,

Mark D. Mullins
Attorney at Law

Law Office of
MARK D. MULLINS
206 South Lincoln Street, Suite 205
Port Angeles, WA 98362
Telephone: (360)457-7223 Facsimile: by arrangement
mullinslaw at msn.com<mailto:mullinslaw at msn.com>

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