Also known as: nonprobate instrument · non-probate instrument · non-probate instruments · nonprobate transfers · nonprobate assets
Written by attorneys — see sources below.
Arrangements respecting property or contract rights established during the donor's life under which the right to possession or enjoyment of the property or to a contractual payment shifts outside of probate to the donee at the donor's death. Substantial lifetime rights of dominion, control, possession, or enjoyment are retained by the donor. Common examples include revocable inter vivos trusts, life insurance policies, pension accounts, payable-on-death designations, joint ownership with right of survivorship, and annuities with death benefits.
Nora Nash held a joint bank account with her husband Neil Nair. Neil died first. The probate court valued Nora's ownership interest in the account immediately before Neil's death under the applicable statute. That valuation fixed the amount included in the augmented estate for Nora's later elective-share claim.
After Naomi Norton's death, her surviving spouse Nikhil Narayan received insufficient assets by will. The court applied the value of Naomi's nonprobate transfers under Section 2-205 first to satisfy the remaining elective-share amount. Recipients of those transfers bore liability in proportion to the value they received.
Nancy Nelson remained the named beneficiary on her ex-husband's ERISA-governed life insurance policy after their divorce. The children sued under a state statute that automatically revoked the designation upon divorce. The Supreme Court held that ERISA preempted the state statute, so the proceeds passed to Nancy under the nonprobate instrument.
Donna Rae Egelhoff was married to David A. Egelhoff. Mr. Egelhoff was employed by the Boeing Company, which provided him with a life insurance policy and a pension plan. Both plans were governed by ERISA, and Mr. Egelhoff designated his wife as the beneficiary under both. In April 1994, the Egelhoffs divorced. Just over two months later, Mr. Egelhoff died intestate following an automobile accident. At that time, Mrs. Egelhoff remained the listed beneficiary under both the life insurance policy and the pension plan. The life insurance proceeds, totaling $46,000, were paid to her. Respondents Samantha and David Egelhoff, Mr. Egelhoff's children by a previous marriage, are his statutory heirs under state law. They sued petitioner in Washington state court to recover the life insurance proceeds. In a separate action, respondents also sued to recover the pension plan benefits. The trial courts, concluding that both the insurance policy and the pension plan "should be administered in accordance" with ERISA, granted summary judgment to petitioner in both cases. The Washington Court of Appeals consolidated the cases and reversed. Applying the statute, it held that respondents were entitled to the proceeds of both the insurance policy and the pension plan. The Supreme Court of Washington affirmed. Courts have disagreed about whether statutes like that of Washington are pre-empted by ERISA. The Supreme Court granted certiorari to resolve the conflict.
View caseNonprobate transfers by the decedent to persons other than the surviving spouse are included in the augmented estate. The marital-property portion of certain nonprobate transfers is then applied toward satisfaction of the elective-share amount under the statutory schedule.
A will substitute must retain substantial lifetime control in the donor and shift the right to possession or enjoyment at death outside probate. Purely commercial arrangements and outright irrevocable gifts fall outside the category.
No. A will cannot dispose of property that passes by operation of a nonprobate instrument such as a joint tenancy or payable-on-death designation. Title passes directly to the surviving joint tenant or designated beneficiary.
Yes. A transferee of a nonprobate transfer is subject to liability to the probate estate for allowed claims and statutory allowances to the extent the estate is insufficient, up to the value received.
…decree of dissolution or declaration of invalidity.” Wash. Rev. Code § 11.07.010(2)(a) (1994). That statute applies to “all nonprobate assets, wherever situated, held at the time of entry by a superior court of this state of a decree of dissolution of marriage or a declaration of invalidity.” § 11.07.010(1). It defines…