[WSBAPT] IRAs, Beneficiary Designations, and Subsequent Marriage

[David Faber]

I assisted a married couple in preparing mutual Wills about this time last
year. About six months ago, one spouse suffered a series of heart attacks
and strokes, as well as some additional medical complications, and said
spouse is about to enter hospice care. At the time that we executed the
Wills, I gave instructions to the spouses to update their nonprobate asset
beneficiary designations, as the spouses were to be dependent upon
each-other's retirement funds to live for the remainder of their respective
lives. Unfortunately, the spouse who is now dying appears to have failed to
follow through on that and never updated their beneficiary designations on
their IRA held down in Texas, which has beneficiary designations that
significantly predate the marriage. Spouses have been married for about two
years, have no community property agreement, and the well-spouse has not
signed a waiver regarding the beneficiary designations.

To make matters even more fun, the spouses entered into a "Mutual Wills
Agreement" which provides, in relevant part, "*Covenant to Not Make
Non-Probate Transfers at Death*. Each spouse does further expressly
covenant and promise as follows . . . (c) to not designate beneficiaries on
any bank account or investment account other than to the other spouse or
one-half to each spouse’s child(ren) or issue thereof. . ."

I have not been able to find any conclusive information in the RCW
regarding the failure of a beneficiary designation on IRA that predates a
marriage, and my gut is telling me that this account would be treated as a
separate property asset. That said, the Mutual Wills Agreement was intended
to ensure that the spouses would be guaranteed beneficiary of each-other's
retirement assets. I'm thinking I'm going to have to file a TEDRA action to
seek a court order to alter the beneficiary designation on the IRA, but
want to see if maybe I'm missing a simpler option. Any thoughts?

Best,
David J. Faber
Faber Feinson PLLC
210 Polk Street, Suite 1
Port Townsend, WA 98368
(360) 379-4110

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