[WSBAPT] Specific gift result if estate not large enough

[Eric Nelsen]

I think that it depends heavily on exactly how the gifts are spelled out in the Will, and whether or not the gifts of cash to the other two kids are properly "specific gifts" within the abatement scheme of Ch. 11.10 RCW<https://app.leg.wa.gov/RCW/default.aspx?cite=11.10&full=true>.

If the condo share and the cash gifts are all "specific gifts" then the lack of cash would cause all three to abate ratably per the statute which might inadvertently trigger a need to partition/sell the condo.

If the cash gifts were "demonstrative gifts" then they would be honored up to the amount available, and then fail as to the remainder per RCW 11.10.010(1) next-to-last sentence.

If the condo were a specific gift and the cash gifts were portions of the residue "equal in value to the half-interest in the condo," then I think same result as for a demonstrative gift.

I think it's better though to address the possibility and have client think about what to do in that case. She probably has a feeling about it--is it more important that the condo not be sold, or that the gifts to the three kids be equal?

Also, there are valuation questions that should be nailed down firmly. How should the condo interest be valued at death for purposes of determining amount of cash gift to the other kids, anyway? 50% of fair market value, or should there be a discount to value because it's a half interest? Certified appraiser or CMA? Does anyone have a right to challenge value? Can kids hire their own appraisers and all the results would be averaged, for example? Or some kind of arbitration in event of dispute, or is the PR's decision final?

One possible option that needs more work, but:

                A. All my interest in the condo at [address] I give to my son X.
                B. All the residue of my estate I give as follows:
                                1. I give a sum equal to 50% of the fair market value of the condo as a whole to my son Y, and an equal sum to my son Z. The fair market value of the condo for these purposes shall be determined as of my date of death, and shall be determined at Estate expense by a certified appraiser. The appraiser's opinion shall be final and conclusive, except that any beneficiary may obtain an appraisal by a certified appraiser at his own expense within sixty (60) days of notification of the appraised value set by the Estate, and in that event all the appraisals shall be averaged to determine fair market value. If the residue of my estate does not have sufficient value to fully fund the gifts under this paragraph B(1), then I give the rest, remainder, and residue of my estate in equal shares to my sons Y and Z.
                                2. If any assets remain in my Estate after the gifts under paragraph (B)(1), then the rest, remainder, and residue of my estate I give in equal shares to my sons, X, Y, and Z.

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Rich McEntee
Sent: Monday, March 25, 2019 3:21 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Specific gift result if estate not large enough

Hello

Hopefully this is not an annoyance as I have posted to two listserves

I have a client who was widowed about a year ago. At the husband's death, 1/2 of a community condo passed to one of the client's 3 sons. The client's desire is to pass the remainder of the condo to the son who owns the half. In order to equalize the estate, she wishes to give a sum of money to the other two sons. At present, the estate is large enough that there should be no issue with the bequest of the cash. However, I am attempting to sort through what would be the result if the client passes away and the estate still owns the condo but does not have enough money to pay the cash bequests? I am not certain that the interest in the condo is truly equivalent to the share of cash that each other brother is to receive. Without any specific direction, how would this sort itself out? Any thoughts?

Thank you
Rich

RICH McENTEE
McENTEE LAW OFFICE
3800 Bridgeport Way W, Ste A411<x-apple-data-detectors://1/1>
University Place, WA 98466<x-apple-data-detectors://1/1>
253.227.9894<tel:253.227.9894>(m)
jrmcentee at gmail.com<mailto:jrmcentee at gmail.com>
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