Earlier this month, Division II of the Washington State Court of Appeals issued a published opinion in the trust administration case of Casterline v. Roberts.  

The case involved an adult daughter who had been named as the trustee of her mother's revocable living trust.  She used her role as trustee to spend a large sum of her mother's money to purchase property and build a house for herself with the stated but never realized intention of having her mother live with her. 

Upon the petitioning of the mother's other children, a professional guardian was assigned for the mother who sought to put a lien on the house to recover the mother's money only to find that the daughter had already transferred the property and her other real estate to her husband and brother-in-law via quit claim deed for no consideration.  The court allowed the guardian to put the lien on the home anyway under a theory of fraudulent transfer and found that the homestead exemption did to apply to the home because it was bought with ill gotten resources.  The daughter appealed and the court upheld the lower court's decision.

While much of case focuses on the ins and outs of liens and exemptions, it also contains some good reminders about the meaning of fiduciary duty that can be helpful to anyone serving as a trustee or attorney-in-fact for a parent. 

It is not uncommon in our experience for aging parents to prefer to live with adult children if possible over living in a nursing home or other institutional setting and that often involves costs to the children that can properly be paid for by a trust or through a power of attorney but only with great care - which was not taken in this case.  The court found that if the daughter had really intended to have her mother live with her she should have segregated her mother's funds from her own and protected her mother's interest by providing her with a secured interest in the house - which would have prevented the very kind of self-serving transfer the daughter later engaged in.  While court isn't specific, it appears that to avoid the breach the trustee could have either put the trust directly on the title of the property to reflects its percentage investment or could have been given a promissory note backed by a deed of trust. 

Moreover the court makes it clear that any self-dealing and co-mingling of assets can be a breach of fiduciary duty that would result in a fiduciary being removed even if the money is eventually replaced as the trust suffers no losses.  All to often we find that people get "sloppy" with powers of attorney and revocable trusts because, unlike guardianship or court supervised trusts, there are usually not annual accountings or reports that need to be affirmatively produced for the court each year.  That lack of oversight is part of why these are less expensive ways to assist a disabled loved one but it should not be viewed as permission to cut corners by creating joint accounts, failing to keep keep funds segregated, or failing to keep adequate records of spending.  The facts of the Roberts case suggest that this fiduciary did not have her mom's best interests at heart and clearly should have been removed. But we have also seen very well intentioned and loving adult children get challenged and even removed from their parents' care because family conflict erupts and they have not bee doing a good job of keeping funds separate and accounted for.  

If you are serving as a trustee, attorney-in-fact or other fiduciary and what advice how to best protect you and your loved ones, please call us to schedule a consultation at info@phinneyestatelaw.com or (206) 459-1908. If you are concerned that you or a loved one is being taken advantage of by a current fiduciary and want to understand your options for responding, please contact us as well. 

The United States Supreme Court issued an opinion on Monday that addressed whether Social Security Survivors' benefits were payable to posthumously born children who were conceived after their father's death. 

The case involved twin children conceived by Karen Capato through in vitro fertilization after her husband's death from cancer.  Her husband had preserved his sperm after being diagnosed with cancer because he feared the cancer treatment would make him sterile. He died shortly afterwards and his wife conceived the twins about 18 months after his death. She applied to the Social Security Administration for survivors' benefits for the children. She had won her case in the lower federal appellate court, but the Social Security Administration appealed to the U.S. Supreme Court. 

The justices in this case examined several sections of the Social Security Act. The court found that while the Capato children met the definition of child under the act, they didn't meet the act's requirements for family status in order to qualify for survivor benefits. One of those requirements was whether the children could inherit under the intestacy law of their father's residence at death. Florida's law permits children born posthumously to inherit only if they were conceived during the father's lifetime.

It might seem likely a rare circumstance that would require such a ruling but PSB News Hour reports that there are currently more than 100 applications for survivor benefits pending with the social security administration from posthumously conceived children.  Whether is decision will apply to them will depend heavily on what state their deceased parent resided in at the time his death.  In 2011 Washington State addressed the issue of posthumously born children in RCW 26.26.730 but determining that If an individual who consented in a record to be a parent by assisted reproduction dies before placement of eggs, sperm, or an embryo, the deceased individual is not a parent of the resulting child unless the deceased individual consented in a signed record that if assisted reproduction were to occur after death, the deceased individual would be a parent of the child.

The decision in the Capato case is silent as to whether such a record existed but it seems unlikely since such an option isn't contemplated under Florida Law but it would likely be the deciding factor for children conceived after the death of a parent who was a resident of Washington State at death.

If you have questions about the rights of posthumously born children or other circumstances raised by non-traditional family relationships, please contact us for a free consultation at (206) 459-1908 or email us at info@phinneyestatelaw.com.

On May 8, 2012 the Washington State Court of Appeals, Division II issued a new published opinion, Witt v. Estate of Young, which held that claims for quasi-community property by partners of the deceased who were in intimate and committed relationship are not subject to the creditor claims time limits and can be brought, most properly as a challenge to the inventory anytime until the probate is closed. 

In the Witt case, the deceased's long time partner filed a creditor's claim in her late partner's probate holding that all the property was quasi-community property and therefore should go to her.  The Personal Representative of the Estate denied the claim with a notice that any challenge to the denial must be made in 30 days.  More than 30 days late, Witt filed a complaint against the Estate in Superior Court for Partition of real and personal property.  The Estate moved for Summary Judgment to have the complaint dismissed on the basis that she had missed the thirty day window for making a challenge to the denial of her creditors' claim. The trial court declined to dismiss the action and the Estate appealed.

The Court of Appeals made on factual determination of whether the property in question would be covered by the quasi-community property rules that allow a court to treat property earned by either party during an intimate and committed relationship as analogous to community property earned during a marriage.  It left that question to the trial court.  But it did find that such a claim is really a challenge to the inventory of the Estate and not a claim for debt owed by the decedent and so isn't a creditor's claim and isn't subject to the creditor's claim time limits.  The court acknowledged that Witt had initially brought a creditors claim but found that her having done so did not preclude from bringing a more proper claim at a later date.  The court also went out of its way to make it clear that such a claim would need to be brought before the probate was closed or it would be barred.

The case provides some helpful guidance to both non-married partners who fail to do proper estate plans and personal representatives of their partner's estates about how these claims should be brought and the timelines that govern them.  This was important because while the court has been consistent and often generous in awarding these claims on an equitable basis they have come before the court in a variety of manners leaving practitioner frequently perplexed about how to properly introduce such a claim and proper way to accept or reject such claims.   As a practical matter, by channeling these claims in to the TEDRA process for challenging inventories the court has also created more generous timelines and enhanced incentives for resolving these disputes through alternative dispute resolution presumably with the hope of having more of these heavily fact intensive cases settled by the parties rather than litigated through the courts.  It is also an important reminder to personal representative who are administering estates were such a claim is possible not to let estates linger open longer than necessary as it will increase the time that these challenges can be brought and to be very careful about making any preliminary distributions before closing the estate where any possible claim could be made by an unmarried partner. 

Perhaps its best warning is that couples who are in long term, committed relationships are really best served and best taken care by careful planning before death, ideally including powers of attorney, co-habitation agreements, and wills that spell out what the plan is with regard to the creation of quasi-community property, who should be in charge of crucial life choices, and where assets should flow at death.

If you have lost a partner and want to better understand your possible rights to quasi-community property, or managing an estate that might be subject to such a claim, or are in an non-married committed relationship and want to plan to avoid this kind of potentially ugly and expensive mess at your death, please contact us to schedule a free half hour consultation at info@phinneyestatelaw.com or (206)459-1908.

Phinney Estate Law has recently changed and expanded our hours.  We are now available by appointment Monday, Wednesday, Thursday and Friday from 10 am to 4 pm and Tuesdays from 10 am to noon.  We hope these new hours will allow us to be more available to clients.  To make an appointment, please contact us at (206) 459-1908 or info@phinneyestatelaw.com.

Previous posts have explained that the only requirements of a health care agent are that they be at least 18 years old and not be your doctor or an employee of your health care provider unless they are also a member of your immediate family.  But there are a lot of people who pass that test who would not make good health care agents.  When picking your agent, I would recommend you look for someone with the following qualities, which we find make the best agents from working with family during actual medical crisis. Keep in mind that the importance of some of these factors may depend on whether your top priority is having your wishes honored or having your family feel best about the process.

1. Would be willing to serve in this role and speak on your behalf?
2. Would be able to act on your wishes and separate his/her own feelings from yours?
3. Lives close by or could travel to be at your side if needed? (If your agent is someone who lives far enough away that it would take them a while to reach your treatment facility, you may want to select a temporary agent to serve until your agent can reach you.)
4. Knows you well and understands what’s important to you?
5. Will talk with you now about sensitive issues and will listen to your wishes?
6. Will likely be available long into the future?
7. Would be able to sensitively handle conflicting opinions between family members and friends?
8. Can be an advocate in the face of an unresponsive doctor or institution?

Can't think of anyone in your life who is a perfect fit for all these factors?  Few clients can, but this list can help you create a meaningful pro and con list as you consider candidates.  The goal is to find the best agent you can.

To schedule a consultation to talk about the specific people in your life and who might be your best agent, please contact us at info@phinneyestatelaw.com or call us at (206) 459-1908.