Chapter L. Testamentary Disposition of Nonprobate Assets

• Jurisdiction: Washington

L.TESTAMENTARY DISPOSITION OF NPROBATE ASSETS

L.1. Chapter 11.11 RCW: The "Super Will" Statute

As a general rule, nonprobate transfers cannot be made or altered by will, such as by a clause that purports to change the beneficiary of a life insurance policy or a payable-on-death bank account.⁴⁶⁷ This could, of course, be a considerable inconvenience to a testator who wishes to change one or more nonprobate beneficiaries without having to learn and then carry out the method for each.

Commentators and legislators have for some time discussed the benefits and drawbacks of a so-called "super will" statute, giving a testator the ability to amend will substitutes by will.⁴⁶⁸ In 1998 Washington became the first state to adopt such a statute. Chapter 11.11 RCW, the Testamentary Disposition of Nonprobate Assets Act

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(TDNAA), permits the owner of a limited class of nonprobate assets to designate the beneficiary of those assets in a will. Because the statute is relatively recent and without any precedent, to date there is little case law interpreting it. This section will briefly describe the statutory provisions and the few cases that have construed them.⁴⁶⁹

L.2.Nonprobate Assets Covered by the Statute

Although the general language of the super will statute is sweeping, its actual coverage is limited. The statute applies to the nonprobate assets listed in the general definition of such assets in RCW 11.02.005, but it excludes such important categories as life insurance policies,⁴⁷⁰ joint tenancy in realty, deeds with possession postponed until the owner's death, transfer-on-death deeds,⁴⁷¹ retirement accounts, and community property agreements.⁴⁷²

One writer considered the super will to be a positive but insufficient development because of its limited availability, recommending that all revocable will substitutes be included. Cynthia J. Artura, Comment, Superwill to the Rescue? How Washingtons Statute Falls Short of Being a Hero in the Field of Trust andProbate Law, 74 Wash. L. Rev. 799 (1999). The article somewhat exaggerates the narrowness of the statute, however, as it states that only revocable living trusts and joint tenancy bank accounts with right of survivorship are covered by it.

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Nevertheless, the super will statute is a significant and powerful step toward melding the worlds of probate and nonprobate assets, and it includes within its scope two of the most commonly used nonprobate devices, living trusts and joint bank accounts.

L.3.Operation of the Statute

L.3.a. Designation of a Beneficiary

The basic operation of the super will statute is quite simple: "[T]he owner's interest in any nonprobate asset specifically referred to in the owner's will belongs to the testamentary beneficiary named to receive the nonprobate asset, notwithstanding the rights of any beneficiary designated before the date of the will."⁴⁷³ The designation must be specific, and a general residuary gift or a gift of all of the testator's property does not suffice.⁴⁷⁴ On the other hand, a designation of all or an entire category of nonprobate assets, such as "all of my nonprobate assets" or "all of my payable on death bank accounts" will pass the designated class of assets to the testamentary beneficiary⁴⁷⁵ Such a categorical description only applies, however, to assets the beneficiaries of which have been designated before the date of the will.⁴⁷⁶

If the owner designates a beneficiary after executing the will, the later designation controls. In this regard, "[njothing in the statute limits the written means of designation to any particular form."⁴⁷⁷ Thus any language that clearly indicates the owner's intent to make a particular person the beneficiary of the nonprobate asset will suffice to nullify an otherwise-valid prior testamentary designation.⁴⁷⁸

If a later beneficiary designation is itself subsequently revoked, the prior will's designation does not take effect again: once superseded it is gone forever.⁴⁷⁹

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The language of the statute does not indicate how specific a will's description of a category of nonprobate assets must be, except for the example of'"all of my payable on death bank accounts' or similar language."⁴⁸⁰ Thus when a testator stated in her will that "certain bank accounts and savings accounts and [possible future] evidences of property which are or may be in the joint name of myself and one of my children" were for business convenience only and "not intended as a gift to such child," she was found not to have made an effective designation of those assets to her estate under the super will statute.⁴⁸¹ The court noted that the testator's language was "less precise" than the quoted example from the statute and that she also did not name a new beneficiary for the assets.⁴⁸² Furthermore, it was unclear to which of several accounts owned by the testator her statement referred.⁴⁸³

L.3.b.Waiver

A very important qualification of the right to designate a beneficiary by will is the ability of an owner to waive that right in a signed writing delivered to the financial institution or other third party⁴⁸⁴ This waiver is revocable unless stated otherwise. Because the waiver can be contained in a signature card or deposit agreement,⁴⁸⁵ it could become a part of the "boilerplate" language of such agreements, with the result that many owners of nonprobate assets might waive their right to change them by will without realizing they are doing so, or at least without realizing the later significance of their choice.⁴⁸⁶

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L.3.C.Protection of Financial Institutions and Other Third Parties

Because the will of the owner of a nonprobate asset can change the designated beneficiary...