[WSBAPT] Are inherited IRAs subject to creditors’ claims of decedent?

[Mark Vohr]

In addition to John’s comment, another approach is based on the use of a beneficiary designation that usually control these assets.  Under RCW § 11.02.005 a "Nonprobate asset" does not include: IRA benefits and the benefits payable under many 401(k) plans, a payable-on-death provision of a life insurance policy, annuity, or other similar contract, or of an employee benefit plan; a right or interest passing by descent and distribution under chapter 11.04 RCW; a right or interest if, before death, the person has irrevocably transferred the right or interest, the person has waived the power to transfer it or, in the case of contractual arrangement, the person has waived the unilateral right to rescind or modify the arrangement; or a right or interest held by the person solely in a fiduciary capacity.   This alone does not necessarily protect against an abatement action on all non-probate assets.

Regards,

Mark

Mark C. Vohr, Esq.
Ohana Fiduciary Corp.
Ohana Financial Services
A Washington Trust Company
Mark C. Vohr, J.D., CPG, Principal
PO Box 33710  Seattle, WA  98133
T:  (206) 782-1189 F:  (206) 782-1434
mcv at ohanafc.com      www.ohanafc.com

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of John J. Sullivan, Esq.
Sent: Monday, January 20, 2020 6:34 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Are inherited IRAs subject to creditors claims of decedent?

You are right. Traditional and Roth IRAs are included in the definition of pension or retirement benefit:

https://app.leg.wa.gov/RCW/default.aspx?cite=6.15.020<https://urldefense.proofpoint.com/v2/url?u=https-3A__app.leg.wa.gov_RCW_default.aspx-3Fcite-3D6.15.020&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=K1mLMC1eFjwfeeMM-AC6zQ&m=YVcvxsmEj7VrEa1RG1IX0-XJ9_VR3fatlzGBX3O0Lm0&s=K9loNNr-fEgGM_fYWBD6LDRncZstKKVT2tPMRB19-Ts&e=>

The possible exception would be for past due federal income taxes of the decedent, although the Manual guidance to IRS agents indicates they should be left alone while the participant is alive unless used abusively … whatever that means.

Any confusion may come from the fact that the inherited IRA is no longer protected in bankruptcy from creditors of the beneficiary.

John J. Sullivan

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Dalynne Singleton
Sent: Monday, January 20, 2020 6:13 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Are inherited IRAs subject to creditors claims of decedent?

My reading of RCW 11.18.200 indicates beneficiary of a pension (IRA) are not subject to creditors of decedent as a non-probate asset even if there are not enough other assets to pay the debts of decedent.  Is this correct?  Anyone briefed this or argued against an unsecured creditors claim?



Dalynne Singleton

Gourley Law Group
Snohomish Escrow
The Exchange Connection
1002 10th Street Box 13
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>

Probate Paralegal:  theresa at glgmail.com<mailto:theresa at glgmail.com>
Arbitration/Personal Injury Paralegal:  dara at glgmail.com<mailto:dara at glgmail.com>
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