Estate of Mundell, Matter of, 19071

Citation857 P.2d 631,124 Idaho 152
Decision Date05 August 1993
Docket NumberNo. 19071,19071
PartiesIn the Matter of the ESTATE OF Orie E. MUNDELL, Deceased. Eva MUNDELL, surviving widow of Orie E. Mundell, deceased, Plaintiff-Appellant, v. James E. MUNDELL, surviving son of Orie E. Mundell, deceased; Mary Teats, surviving daughter of Orie E. Mundell, deceased; and Sandy Lindsley, surviving daughter of Orie E. Mundell, deceased, Defendants-Respondents. Lewiston, May 1993 Term
CourtUnited States State Supreme Court of Idaho

Randall, Blake & Cox, Lewiston, for defendants-respondents. David R. Risley argued.

McDEVITT, Chief Justice.

BACKGROUND

Orie and Eva Mundell purchased individual retirement accounts and annuities (IRA's) with community funds, listing Eva Mundell as the owner/annuitant. 1 Orie Mundell subsequently died, leaving the bulk of his community and separate estates to his children by a prior marriage. In the course of probating Orie Mundell's estate, the trial court determined that Orie Mundell's community estate included a one-half community interest in the IRA's. Appellant, Eva Mundell, appeals from the trial court's finding, claiming that the IRA's are her separate property.

ANALYSIS

Absent evidence of gift or transmutation, the character of all property acquired during marriage is presumed to be community property. I.C. § 32-903; I.C. § 32-906; Shumway v. Shumway, 106 Idaho 415, 679 P.2d 1133 (1984); Winn v. Winn, 105 Idaho 811, 673 P.2d 411 (1983). In its "Findings of Fact and Conclusions of Law," the trial court found that there was insufficient evidence to establish that any type of contract or gift had occurred between Orie Mundell and appellant to rebut the presumption that the IRA's are community property. No appeal has been made from these findings. Appellant effectively recognizes that, if Idaho law applies, the IRA's are community property. However, appellant argues that 26 U.S.C. § 408(g) preempts Idaho community property law, and therefore, Idaho law does not apply.

Whether Idaho law is preempted through operation of the Supremacy Clause of the United States Constitution is a question of law which we freely decide. See Dunbar v. United Steelworkers of America, 100 Idaho 523, 602 P.2d 21 (1979), cert. denied, 446 U.S. 983, 100 S.Ct. 2963, 64 L.Ed.2d 839 (1980), overruled on other grounds, Sterling v. Bloom, 111 Idaho 211, 723 P.2d 755 (1986). The preemption of state law is not to be readily inferred. Id. In order for preemption to be applied, it must be determined that state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Maryland v. Louisiana, 451 U.S. 725, 747, 101 S.Ct. 2114, 2129, 68 L.Ed.2d 576 (1981), quoting Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581 (1941).

The portion of the Internal Revenue Code which authorizes and regulates individual retirement accounts is found in 26 U.S.C. § 408. Section 408 generally defines the requirements for creating an individual retirement account and individual retirement annuities. Section 408 also sets forth the tax treatment of such accounts and annuities and the distributions therefrom. Various administrative matters regarding IRA's are included as well. Subsection (g) states: "This section shall be applied without regard to any community property laws." Appellant argues that the language contained in subsection (g) confirms that Congress intended to preempt Idaho community property law regarding the characterization of IRA's. We disagree.

Congress's objective in enacting 26 U.S.C. § 408 was only to establish the qualifications needed to open an IRA and accrue the tax benefits from such an account. It is this objective that subsection (g) addresses. Furthermore, section 408(d)(6) permits an individual's interest in an IRA to be transferred, in whole or in part, to his or her former spouse under a valid divorce decree without such transfer being considered a taxable transfer. This section demonstrates that Congress acknowledged the effect of State domestic law on IRA's. Accordingly, we find no intent by Congress to preempt Idaho community property law as it relates to the characterization of IRA's. Nor does it appear that Idaho law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives" of 26 U.S.C. § 408.

Appellant argues that the cases of Bowlden v. Bowlden, 118 Idaho 89, 794 P.2d 1145 (Ct.App.1989), remanded, 118 Idaho 84, 794 P.2d 1140 (1990), and Bewley v. Bewley, 116 Idaho 845, 780 P.2d 596 (Ct.App.1989), support her preemption argument. However, a strong federal interest was found to be present in those cases because the benefits involved, federal disability and social security benefits, were received from federal programs which were funded by federal taxes and paid pursuant to federal guidelines. The privately funded IRA's at issue in this case were voluntarily funded with community property. Furthermore, the benefits in the Bowlden and Bewley cases were subject to an "anti-attachment" clause which protected such benefits from all legal process. IRA's, on the other hand, have been held to be subject to attachment or garnishment in accordance with state law. See Long Island Jewish Hillside v. Prendergast, 134 Misc.2d 93, 509 N.Y.S.2d 697 (1986); Bartlett Co-op Ass'n v. Patton, 239 Kan. 628, 722 P.2d 551 (1986). Given these differences, the Bowlden and Bewley cases do not...

To continue reading

Request your trial
11 cases
  • State v. Carswell
    • United States
    • Court of Appeals of Idaho
    • August 1, 2023
    ...... court's decision, we affirm the district court's. decision as a matter of procedure. Id. However, as a. matter of appellate procedure, our disposition of the ... objectives of Congress." In re Estate of. Mundell, 124 Idaho 152, 153, 857 P.2d 631, 632 (1993). The state law must be ......
  • Triad Guar. Inc. v. Triad Guar. Ins. Corp. (In re Triad Guar. Inc.)
    • United States
    • U.S. District Court — District of Delaware
    • June 27, 2016
    ...order compelling party to sign consent form for release of IRS records was not preempted by specific IRC provision); In re Estate of Mundell, 857 P.2d 631, 633 (Idaho 1993) (Idaho community property laws with respect to IRAs were not preempted by IRC); Singer v. Dickinson, 588 N.E.2d 806 (O......
  • Idaho Dep't of Health v. McCormick (In re Estate of Perry), 38694.
    • United States
    • United States State Supreme Court of Idaho
    • August 9, 2012
    ...a federal statute before state law will be preempted.Christian, 148 Idaho at 152, 219 P.3d at 476 (quoting In re Estate of Mundell, 124 Idaho 152, 153, 857 P.2d 631, 632 (1993)) (citations omitted). The cooperative nature of the Medicaid program shows that Congress did not intend to occupy ......
  • Idaho Dep't of Health & Welfare v. McCormick (In re Estate)
    • United States
    • United States State Supreme Court of Idaho
    • August 9, 2012
    ...a federal statute before state law will be preempted. Christian, 148 Idaho at 152, 219 P.3d at 476 (quoting In re Estate of Mundell, 124 Idaho 152, 153, 857 P.2d 631, 632 (1993) ) (citations omitted). The cooperative nature of the Medicaid program shows that Congress did not intend to occup......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT