Dear Mr. Premack: My husband and I have been married for many years but we each have two grown children from our first marriages. All of the assets we have now were accumulated during this second marriage and we consider them to be community property. We each have our wills set up to put our estates in trust for each other and then at the spouse's death to go to our respective children. My question is about my IRA. I know that it passes to its beneficiary, but does all of the IRA go to my husband (who is beneficiary) or does half of the IRA go into the trust (and then eventually pass to my children)? Thank you very much for your help! – FH

Money placed into an IRA during the course of a marriage is community property under Texas law. There are certain other types of pensions (like defined benefit pensions) that are subject to the federal ERISA law (Employee Retirement Income Security Act). ERISA generally supersedes state law, and requires certain benefits to be provided to a surviving spouse. The federal courts have ruled that an IRA, though a form of pension, is not subject to ERISA and that state community property law applies to an IRA. Thus, it is possible to create a conflict between the beneficiary designation on the IRA and the surviving spouse’s community property rights under state law.

Here is an example: a married wife contributes $100,000 to her IRA over many years. The contributions are made from earnings, and are thus community property. While most people designate their surviving spouse as direct beneficiary (the tax benefits are broadest this way) this wife designates their son as sole beneficiary. Son is, under the terms of the IRA, entitled to the entire $100,000 amount when mother dies.

Set up in that fashion, the IRA terms conflict with the surviving husband’s community property rights. Under Texas law the IRA is community property since all the money in the IRA was earned during the marriage. Half of the IRA balance is the husband’s property. Designating the son to get all of the IRA, without husband’s consent, is considered to be “fraud on the community estate”. Husband has the legal right to recover his half of the IRA balance when wife dies. She cannot legally give all of the IRA balance to a non-spouse without obtaining the spouse’s consent to do so.

As IRA owner, what can the wife legally do? 1) She can designate all the IRA balance to the surviving husband, which is very typical. 2) She can give all of the balance to another person so long as she obtains written consent from her husband to do so. 3) She can designate half the IRA balance – that is, her community half -- to another person without her husband’s permission, so long as her husband still gets his half share.

In your letter, you say you each set up a trust in your Wills. You ask if the IRA a) goes entirely to your husband as beneficiary, or b) if half goes to your trust and half goes to your husband? You have three legal options:

1) You could keep your current designation which gives all the IRA to your husband and leaves none to your trust. That choice is legal but is not mandatory, and effectively takes benefits away from your children. 2) You could obtain your husband’s written consent for the entire balance to pass into your trust. That choice effectively takes benefits away from his children. 3) You could change the beneficiary designation to leave half of the IRA outright to your husband and half to your trust. That way, his community property rights are honored and each set of children eventually have an equal benefit via the separate trusts in each of your Wills.

You should also have your lawyer review the Wills to be sure they contain the clauses required by the IRS when a trust is designated as a beneficiary. And review your durable power of attorney and medical directives to make sure that they are up-to-date and appoint the proper individuals to care for you if you become disabled.

Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio. Submit estate planning, probate and elder law questions by clicking “submit a question” at, or go there to view the archive of his past legal columns.