[WSBAPT] IRAs, Beneficiary Designations, and Subsequent Marriage

[Rebecca King]

Did you by any chance execute DPOAs that allow the agent to change a beneficiary designation?

Warmest regards,
Rebecca King
Attorney

Northwest Elder Law Group
2150 N. 107th Street, Suite 501
Seattle, WA 98133
Main: (206) 937-6102
Direct Line and Fax: (206) 866-6544

Providing Services in Elder Law

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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of David Faber
Sent: Tuesday, April 21, 2020 1:25 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] IRAs, Beneficiary Designations, and Subsequent Marriage

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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