Nonprobate Assets in Estate Planning

Financial Accounts

Real Property

Joint Tenancy w/ Right of Survivorship

Transfer on Death Deeds

Pay (Transfer) on Death Accts

Jt Accts w/ Rt of Survivorship

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• Vests in beneficiary(ies) upon death of depositor(s)
• Beneficiaries can’t withdraw funds
• Beneficiary can't control account during life of depositor
• Power of Attorney
• Fewer disputes regarding intentions of depositor

• Joint owners own interest in proportion to their contribution
• Both account holders can withdraw and manage funds
• But does it belong to them?
• Vests in surviving account holder upon death of joint owner
• Can lead to disputes over true intent of the primary depositor

Joint owners own an equal undivided interest in the property and upon death, interest passes to surviving co-tenant(s)

CAUTION:

• Gifting/tax issues: IRS & Medicaid
• Judgments against co-tenant?
• Not revocable
• Does a co-owner have a community property agreement?

• Chapter 64.80 RCW
• Created as other deeds are and recorded
• No interest passes during life of transferor
• Can be revoked at any time following deed process
• Property passes to beneficiar(ies) upon death of transferor
• If a beneficiary is dead, that interest lapses

Real Property

Remember:

• Only real property is transferred

• Survivors take subject to encumbrances, including Medicaid liens

Why are NP Assets Important?

Employee

Benefit Plans

Life Insurance

and Annuities

Planning Considerations for Nonprobate Assets

What are NP Assets?

Special

Nonprobate

Assets

• Part of a client's estate
• Poor planning can lead to tax problems, confusion and litigation
• Can be used to tailor client's estate plan
• Can eliminate need for a probate

• Pass to beneficiaries free of creditors and expenses of admin.
• Sometimes useful to name estate as benefeciary of life insurance

CAUTION:

• Keep designations up to date
• Be very cautious before naming the estate or a trust as a beneficiary of an annuity

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• 401(k)s, 403(b)s, IRAs*, etc.
• Pass to beneficiaries free of creditors and expenses of admin.

CAUTION:

• Make sure designations are made and up to date
• Be very cautious before naming the estate as a beneficiary of a retirement plan

• Assets passing through a written instrument other than a person's will
• Examples in RCW 11.02.005(10)
• Note important exemptions from definition: life insurance, annuities, and employee benefit plans

• What are Nonprobate Assets
• Why are NP Assets Important
• Discussion of Various NP Assets
• Final Comments

* Usually not an "employee benefit plan," but still exempt from creditors/estate expenses under state law

RCW 11.02.005(10)

Nonprobate Assets

Final Comments

Other Nonprobate Devices

Gifting

Estate Taxes

Probate isn’t so bad

Superwill Statute

Community Prop. Agreement

Revocable Living Trust

Planning Considerations

• What is it: Agreement that converts present and future acquired property into community prop., and vests all community prop. into the name of surviving spouse
• Purpose: To avoid need for probate upon death of first spouse

CAUTION:

• Educate clients on community property
• Ensure consistency with other assets and designations

• What is it: Ch. 11.11 RCW, which allows testamentary designations of nonprobate assets
• Language in will:

“All my nonprobate assets”

“All my pay on death bank accounts”

“All of my assets”

• Doesn’t cover TOD/JTWROS deeds, IRAs, or assets passing under CPA
• Subsequent change to beneficiary designation will control

• What is it: a trust into which all probate assets are titled and held during the life of the trust's creator(s)
• Purpose: Avoiding probate, confidentiality (no tax benefit)
• All probate assets must be titled into the name of the trust
• Still must follow Washington’s Trust Act after death of trustor/settlor
• Can be used to capture out-of-state real property only (or instead consider TOD deeds if available in other state)

Chad Horner

Curran Law Firm

kingcountyprobates.com