[WSBAPT] Will vs. TODD

[Mark Anderson]

Let's say that the beneficiary disclaims the right to receive title under the TODD and the estate sells the real property.  If the Will so provides, could that beneficiary be entitled to receive any portion of the proceeds of the sale?

Mark B. Anderson
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Lewis, Amy C.
Sent: Wednesday, August 21, 2024 11:55 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Will vs. TODD

There are a couple of interesting cases where a disclaimer was made by a child who then took under a different provision.  The disclaimers were ineffective for federal purposes, but potentially effective for state purposes, which can create interesting tax issues (one involved a disclaimer with the intention of achieving a charitable deduction).  I don't think that would be an issue under your scenario, but always good to keep the complexity of disclaimers in mind.



Amy Lewis, Attorney
Pronouns she/her/hers
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909 A Street, Suite 600 | Tacoma, WA 98402
phone 253.572.4500 | fax 253.272.5732 | www.eisenhowerlaw.com<http://www.eisenhowerlaw.com/>
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 Paul Neumiller
Sent: Wednesday, August 21, 2024 11:51 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Will vs. TODD

Upon further reading and direction from Amy, I think she is right.   26 U.S. Code § 2518 holds that to be a qualified disclaimer "(4) as a result of such refusal, the interest passes without any direction on the part of the person making the disclaimer and passes either (A) to the spouse of the decedent, or (B) to a person other than the person making the disclaimer."

So, in answering the question, it appears that a non-spouse cannot disclaim an interest in real property under a TODD but then still receive the same real property under the terms of a Will.  At least, not as a "qualified" disclaimer.


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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 Lewis, Amy C.
Sent: Tuesday, August 20, 2024 5:30 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Will vs. TODD

It might be simpler to combine a TODD with a nonprobate notice to creditors procedure and skip the disclaimer.

A non-spouse beneficiary cannot make a "qualified" disclaimer of one interest and still receive the asset in a different capacity - only a spouse can do that under federal law.  Might be possible to make a non-qualified disclaimer in your scenario, but you would need to take a look at RCW 11.86.041(2) and draft carefully.



Amy Lewis, Attorney
Pronouns she/her/hers
[cid:image002.png at 01DAF3C2.1AB07D70]
909 A Street, Suite 600 | Tacoma, WA 98402
phone 253.572.4500 | fax 253.272.5732 | www.eisenhowerlaw.com<http://www.eisenhowerlaw.com/>
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 Paul Neumiller
Sent: Tuesday, August 20, 2024 3:33 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Will vs. TODD

OK, so we know the title companies have multiple problems with Transfer on Death Deeds.  But, I was wondering has anyone done an analysis of whether it is a good idea to prepare a TODD anyway and give the family an option to use the TODD if the circumstances are right when the Decedent passes. (A lot of estate planning clients are coming in and requesting a TODD)  RCW 64.80.100 appears to lock-in the family if the Decedent signed and recorded a TODD.  But a beneficiary can still disclaim the interest using RCWs 64.80.110 and 11.86.041 "(1) Unless the instrument creating an interest directs to the contrary, the interest disclaimed shall pass as if the beneficiary had died immediately prior to the date of the transfer of the interest."

So, can a beneficiary disclaim receiving the real property via the TODD but still receive the real property via terms of the Decedent's Will?  (Yeah, I know, the recipients under the TODD and under the Will need to be the same.)  If so, then by preparing the TODD, the family may have the option to utilize the TODD if it's a good idea and disclaim the TODD if its not a good idea.  Any thoughts?


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