Also known as: nonprobate transfer · non probate transfer · non-probate transfers · nonprobate transfers · nonprobate asset · nonprobate property
Written by attorneys — see sources below.
A transfer of property that takes effect at the owner's death by operation of law or contract rather than by will or intestacy. The arrangement must allow the transferor to retain substantial lifetime control while shifting possession or enjoyment outside probate upon death.
Naveen Nanda and his wife Natalie Norris held their home as tenants by the entirety. While divorce proceedings were pending, Naveen executed a will devising his interest in the home to his brother Nolan Nunez. Naveen died still married with the tenancy intact. Title passed directly to Natalie by operation of law, and the will had no effect on the property.
Nicholas Nunez died survived by his wife Noah Nakamura. Noah owned a revocable trust that would pass remainder interests to her parents at her death and a life insurance policy naming her cousin as beneficiary. To compute the augmented estate for Noah's elective share, the trust remainders were included as her nonprobate transfers to others but the insurance proceeds were excluded from the valuation.
Neville Norton designated his wife as beneficiary of his ERISA-governed life insurance policy and pension plan. After the couple divorced, Neville died in an accident. A state statute automatically revoked the ex-spouse designation on divorce, but federal law preempted the statute and the benefits passed to the named beneficiary under the plan documents.
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 caseNo. A will cannot dispose of nonprobate property held as tenants by the entirety or in joint tenancy with right of survivorship. Title passes by operation of law to the surviving joint tenant even if divorce proceedings are pending and the will attempts to devise the property to a third party.
The remainders are included in the augmented estate as the spouse's hypothetical nonprobate transfers to others. Life insurance proceeds that would have been included in those transfers are not valued as if the spouse had died.
ERISA preempts a state statute that automatically revokes a former spouse's beneficiary designation upon divorce. The plan documents control, and the named beneficiary receives the benefits.
…opinion Opinion of Justice Thomas A Washington statute provides that the designation of a spouse as the beneficiary of a nonprobate asset is revoked automatically upon divorce. We are asked to decide whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 832, 29 U.S.C. §1001 et seq., preempts that…