The increasing popularity of nonprobate transfers of property at death has created a "revolution" in family wealth transmission. Yet the law on creditors' rights to reach such transfers is badly confused. In some cases, exemptions from creditors' claims are far broader than can be justified. In others, existing creditors' rights are protected but undefined. In still others, it is unclear whether creditors can reach the property at all. There is no procedure for the enforcement of such rights as creditors may have no specified time limit within which claims may be brought. This lack of system invites abuse and is especially hard on involuntary creditors. The Author examines each of the most widely used nonprobate transfer mechanisms: community property agreements, joint property, multi-party bank accounts, United States Savings Bonds, life insurance, deferred compensation benefits, trusts, and other transfers payable on death. Creditors' rights under each mechanism are examined, areas of confusion identified, and specific improvements recommended. The Author proposes that, excepting specific statutory exemptions, both probate and nonprobate property be available to satisfy creditors' claims. He further recommends that a procedure for providing notice to creditors be established in situations where a personal representative is unnecessary and that procedures be established providing for the appointment, when necessary, of a personal representative to handle claims against nonprobate property. Finally, he recommends an extended time period for the bringing of claims against nonprobate property. The Author supplies a draft statute incorporating his recommendations.
Thomas R. Andrews,
Creditors' Rights Against Nonprobate Assets in Washington: Time for Reform,
65 Wash. L. Rev.
Available at: https://digitalcommons.law.uw.edu/wlr/vol65/iss1/3