Legal Question in Wills and Trusts in Texas
Texas. Wife dies and husband dies 108 hours later, not same incident. IRA owned by husband named wife as primary beneficiary and for contingent only the word "son". I have some understanding of the community property rules and the 120 hour rule (I think called probate rule 47). My understanding is that all the property is to be divided 50/50 and each half to be distributed according to the will of each spouse. In this case the wife left it to her two kids from previous marriage (once you exclude the husband who did not survive past the 120hrs). The husband's will (again excluding the wife) leaves 1/2 to her two children (his step children from above) and 1/2 to his biological son.
Questions:
1.does the IRA go thru probate, which would give effectively 75% to the step kids and 25% to the biological son. The holder of the IRA at this time claims the term "son" is ambiguous despite the fact that he had only one biological son. We are told it can be argued that it is community property especially since "son" might be ambiguous by some and others say that son, since there is only one, could be argued for the son to inherit the entire IRA outside of probate.
2.Do I understand correctly that the estate legally has to pass the same 75% to the step kids and 25% to the biological son? (Which is the division if it goes 50/50 and then the husband's will directed 50% of his to the step kids.
1 Answer from Attorneys
This question has the feel of a bar question. You are correct about the 120 hour rule and community property but a key issue is that an IRA does not pass through probate. The IRA can be paid to the estate either through lack of valid beneficiary designation or because the estate was named as the valid beneficiary and at that point it becomes an asset of the estate and subject to probate.
You know his estate is not a named beneficiary so the issue is whether the beneficiary designation is valid. An account holder can designate a class of individuals rather than a name as a beneficiary. When a class is named you must apply the rule against perpetuities--the single worst rule any lawyer must learn--to determine who might be statutorily excluded from the class. Here, the rule is inapplicable because all three potential class members were alive at the time of the husband's death and there will be no further children
If the class designation can be readily ascertained then whoever is designated in the class is a beneficiary. Here, the class "son" seems very obviously to relate to husband's son. If the son is still alive it seems straightforward that he is the sole beneficiary and entitled to receive the full value outside of probate.
The institution holding the account is not going to want to make the determination of who is or isn't in the class. They will want the family to take the issue of the class designation to the probate court and let the court make a ruling on the class designation so it can just follow whatever the court says. So you may need declaratory judgment on the issue of who is "son" to get the institution to release the account.
If by some chance the designation is not valid, the IRA assets would be divided 75%/25% as you describe IF the wills are both valid AND the entire IRA assets are probated as community property. If some of the IRA funds were acquired before the marriage then some of it might be separate property of the husband, in which case the account's assets would not be divided equally to the husband's estate and the wife's estate.
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