[WSBARP] Non-pro-rata distribution of community property

[Gerald Sprute]

HI all,

I have a question regarding non-pro-rata distributions of an estate.  Executor (surviving spouse) has nonintervention powers.  There’s a  house and a 401(k).  Everything is community property.  Estate valued over $3M, and there is a disclaimer trust to be established for the surviving spouse to avoid estate taxes when she passes.

Executor-spouse is moving into assisted living and the home is being sold.  We want to distribute 100% of the house sale proceeds into the disclaimer trust, and none of the 401(k).  Is this permissible as non-pro-rata distribution from the estate?  Problem is that there’s no other nonqualified funds (non-retirement account) to fund the disclaimer trust, and we don’t want to have to pay income tax on a 401(k) distribution to the disclaimer trust (there’s no conduit language in the trust).

Anyone done this before?  I’ve looked for some legal authority but haven’t found anything past the standard “executor can make non-pro-rata distributions if they have nonintervention powers.

Jerry Sprute

Law Office of Gerald A. Sprute
P.O. Box 1657
Duvall, WA 98019
Tel: (425) 892-4079
Fax: (425) 844-9151
[X]www.sprutelaw.com <http://www.sprutelaw.com>









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