The largest wealth transfer in history is occurring right now. This wealth transfer has nothing to do with the downturn in the stock market or problems in the banking industry.
Because of the aging U.S. population, there is an ongoing intergenerational transfer of wealth that will be the most significant transfer of assets in the history of the world. “Between 2011 and 2035, the Silent Generation and first wave Baby Boomers will transfer $38 trillion to heirs and charities.”1
What does this mean for a family law client whose ability to survive this worldwide financial downturn may depend on court-ordered child support? A family law practitioner may be able to help protect the children’s financial interests if the paying parent is due to inherit assets. Payment for child support can be collected from certain probate assets of an heir/beneficiary since all assets of the paying parent are before the court in a child support collection proceeding.2
The court retains continuing jurisdiction over the parties until all duties of support are satisfied.3 This includes payment of current child support, past due child support (even if no current child support is due) and spousal maintenance.4 A two-year bond to assure payment of future child support also can be required by the court.5 A family law practitioner may therefore seek a court order requiring the beneficiary to pay all past child support obligations, plus two years of future support from his/her inheritance.
Child support has the priority of a secured creditor.6 Child support is also a separate judgment each month as it becomes due. A family law practitioner may appear in a probate action to recover back and current child support from a beneficiary or may bring a contempt action in family law court to secure payment.
In a probate action, it is necessary to give notice of the child support lien to the personal representative. If the child support is collected through the Division of Child Support (DCS), DCS usually files a lien in the county where the paying parent lives (or where the paying parent may have assets) for the full amount of back support.
A phone call to DCS can confirm whether liens have been filed in the county where the probate is being heard.7 DCS will certainly appreciate the tip-off that a non-custodial parent is coming into some money that could be used to satisfy the child support debt.
Some decedents leave their assets in a spendthrift trust so third-party creditors cannot reach the funds. If the probate assets are held in trust for the beneficiary, the assets are protected from collection proceedings.8 RCW § 6.32.250 protects trust assets from creditors of a third-party beneficiary.
However, RCW Title 11, which governs probate and trust law, provides an exception for child support. RCW § 11.96A.190, which allows for the support of children of the beneficiary of a trust from the trust income, specifically references RCW § 6.32.250:
Nothing in RCW 6.32.250 shall forbid execution upon the income of any trust created by a person other than the judgment debtor for debt arising through the furnishing of the necessities of life to the beneficiary of such trust; or as to such income forbid the enforcement of any order of the superior court requiring the payment of support for the children under the age of eighteen of any beneficiary.9
If the paying parent is to inherit real property through the probate action, the real property can be used to satisfy the child support obligation. At the moment of death, real property vests in the beneficiary.10 If the beneficiary owes back child support, then the beneficiary is defined as insolvent under the Uniform Fraudulent Transfers Act (UFTA) because the beneficiary has been unable to pay his/her debts as they become due.11
If the beneficiary is insolvent, then he or she cannot give away an asset to avoid payment of the child support debt without violating the UFTA.12 This includes inherited assets. For example, if the paying parent were to quitclaim deed the inherited property to another individual in an attempt to hide the asset from child support collection, this would violate the UFTA.
The State, through the King County Prosecuting Attorney and DCS, is actively pursuing child support collection from probate.13 If an obligor parent is inheriting money or other assets, it is appropriate that child support should be paid from the inheritance.
In a probate proceeding, the State requests payment of all past-due child support before the beneficiary personally receives any funds. This request follows the legislative directive that there is “an urgent need for vigorous enforcement of child support and spousal maintenance obligations.”14
Plus, the State has a compelling interest in enforcing child support obligations so that children can be supported by their parents and not by the taxpayers.15 Child support enforcement reinforces the public purpose of protecting the welfare of children and protecting each child’s fundamental right to support.16
If a support obligor is to receive a windfall through an inheritance, this unearned money should be used to satisfy his or her support debt before it is spent on other things. Don’t be surprised in your next probate case if the State appears and requests payment of the beneficiary’s interest to DCS for application to his or her child support obligation.
1 “Wealth Transfer: Sizing, Trends and Opportunities,” November 2008, Key Findings, www.cerulli.com. See also “White Paper, The Fabled Wealth Transfer: Urban Legend or Reality?” November 2008, Steve McNaughton and Dennis Roberts, Association of Certified Merger and Acquisition Professions.
2 RCW ch. 26.18.
3 RCW § 26.18.040.
4 RCW § 26.18.040(3), .050(5).
5 RCW § 26.18.150.
6 RCW § 26.18.110; Roberts v. Roberts, 69 Wn.2d 863, 866, 420 P.2d 864 (1966).
7 The Division of Child Support in Seattle: 206-341-7000.
8 RCW § 6.32.250.
9 RCW § 11.96A.190.
10 RCW § 11.04.250.
11 Uniform Fraudulent Transfers Act, RCW ch. 19.40.
13i “When the attorney general or prosecuting attorney appears in, defends, or initiates actions to establish, modify, or enforce child support obligations he or she represents the state, the best interests of the child relating to parentage, and the best interests of the children of the state, but does not represent the interests of any other individual.” RCW § 74.20.220(4). The Prosecuting Attorney has authority “to use any and all civil and criminal remedies to enforce child support obligations regardless of whether or not the custodial parent receives public a§istance.” RCW § 26.18.035. See also RCW § 74.20A.010 & .030.
14 RCW § 26.18.010.
15 In re Marriage of Didier, 134 Wn. App. 490, 140 P.3d 607, rev. denied, 160 Wn.2d 1012 (2006) (citing Childers v. Childers, 89 Wn.2d 592, 575 P.2d 201 (1978)).
16 Johnson v. Johnson, 96 Wn.2d 255, 262, 634 P.2d 634 (1981); RCW § 74.20.010.