Spousal and Family Award in Probate
The Washington State Legislature has recently updated the statute that determines how much a surviving spouse (or registered domestic partner) and family members may be awarded in a probate. This award is different than a typical inheritance. The purpose of the law is to provide support for a spouse and/or children of the deceased during the pendency of the probate and afterwards.
Who?: This law applies to surviving spouses, registered domestic partners and children of the deceased person. This law is most commonly used for surviving spouses, so for the purpose of this article, I will refer to all of these classes of people as a “spouse.”
What?: RCW 11.54 allows a spouse to protect assets of the deceased from creditors and, in certain circumstances, allows a spouse to be awarded assets in a probate that would not have otherwise been awarded to the spouse.
When?: A claim must be made within 1) 18 months of the date of death if a probate was opened within 12 months of the date of death, 2) before the end of a Washington State probate, or 3) before six years after the date of death.
How?: A claim is made by filing a petition under the Trust and Estates Dispute Resolution Act (TEDRA). The amount of the claim is given priority in the process of paying for liabilities of the deceased and distributing assets to the heirs of the deceased. With some exceptions, the spousal award is paid to the spouse after the costs of administration of the estate, costs of funeral expenses and the costs of medical expenses related to a final sickness. If the estate still has assets after those expenses are paid, the spouse will receive the spousal award before payment of other creditors and distribution to other heirs and beneficiaries.
How Much?: The amendment to RCW 11.54 goes into effect on August 1, 2024. The recent legislation changed the amount that a spouse can be awarded. Before 2021, the formula was simple. The spousal award was $125,000.00. The spousal award was tied to the “homestead exemption.” In 2021 the homestead exemption was increased to the median home value in the county where the person lived. This dramatically increased the amount of the spousal award. The 2024 legislation reduced the amount of the spousal award but made it similar to the amount that a living couple could exempt from their creditors. The court can also adjust the basic award up or down based on specific criteria specified in RCW 11.54.
For background on the homestead exemption, it is an amount of equity in your home, or real estate that you intend to occupy as a home, that you can protect from creditors. A creditor may attach a lien to real estate and have that property sold at public auction. The amount of the homestead exemption would be paid to the homeowner before any money was paid to a creditor. Effectively, this makes a person’s home off limits to a creditor unless there is equity above the homestead exempt amount. In 2021 when the homestead exemption increased from $125,000.00 to the median home price in the county, many more people were able to protect the equity in their homes from creditors.
The amended spousal award law in RCW 11.54 allows a spouse to protect the amount of equity that the couple could have protected before the death of the spouse. For example, if a couple living in Snohomish County in 2024 had $500,000.00 equity in their home, they could protect 100% of the equity from creditors because that amount is less than the median home price in Snohomish County in 2023. Likewise, a spouse would be able to protect that amount from most creditors of the estate and/or have that amount be distributed to the surviving spouse before the assets of the estate are used to pay creditors and distributions to other heirs and beneficiaries. While RCW 11.54 allows the basic award to be up to the median home price in their county, it does not allow the surviving spouse to use that whole amount if the equity in the home is great enough to use the full amount. The surviving spouse can only get an award in the amount of the equity equal to or less than the median home price. Also, the award must include the equity in the home, which means it is fully used by the home equity and may not be used for other assets of the estate.
The other change in 2024 is that if a couple had less than $125,000.00 in home equity that they could have protected with the homestead exemption before death, the surviving spouse can protect up to $125,000.00. This amount is set in 2024 and will increase each year to adjust for inflation. If a surviving spouse uses this method to calculate the basic spousal award, any assets of the estate can be protected by the award amount.
Examples:
Couple with home equity:
A married couple lives in Snohomish County and Spouse “A” died in 2024. They have a home worth $800,000.00 and a mortgage of $500,000.00. A creditor has made a claim on the assets of A’s estate in the amount of $300,000.00. The estate has $200,000.00 in other assets. The estate is still solvent, but if the creditor were fully paid, the home would need to be sold to use A’s equity in the home. Before the death of A, they could have protected all of the equity in their home because the equity is less than $760,600.00, which was the median home price in 2022 for Snohomish County. The amount of the award would be $300,000.00, but it will be entirely used up by the home equity. No other assets can be protected by the basic spousal award. The $200,000.00 in other assets will be used for the cost of administration, funeral costs and final medical expenses. Any remaining estate assets would be used to pay the creditor’s claim.
Couple without home equity:
Same hypothetical, except the couple does not own a home. Because the couple could not protect any assets with the homestead exemption, the spousal award will not be measured based on the homestead amount. Instead, the basic spousal award would be $125,000.00. The assets of the estate ($200,000.00) would be first used for administration, funeral costs and final medical expenses, then the surviving spouse would receive $125,000.00 as the basic award. Any assets remaining in the estate would be used to pay the creditor’s claim. Conclusion: Between the 2021 amendment to the homestead exemption and the 2024 amendment to the spousal award statute, the legislature has increased the amount a surviving spouse can protect from creditors of the estate. This process can be useful in a probate where the debts exceed the liquid assets of the estate or where a deceased person may have left their entire estate to someone other than their spouse. to RCW 11.54 makes the protection for a surviving spouse roughly mirror what the married couple could have protected from creditors during their lifetimes. Estate planning and probate are complicated and a couple’s estate planning could dramatically change the necessity of relying on the spousal support statute to protect assets upon the death of the first spouse in a married couple. Effective estate planning can minimize or eliminate the need for complicated spousal award calculation.
To learn more about Spousal and Family Award in Probate, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.