FREQUENTLY ASKED QUESTIONS

Oftentimes, durable powers of attorney are granted to individuals without the wherewithal or motivation to be completely transparent with respect to the acts taken and, in particular, assets expended under their authority as attorney in fact. When attorneys in fact are acting with less than desirable accountability, Washington law provides that the principal’s spouse, guardian, or another person demonstrating sufficient interest in the principal’s well-being can petition the court for an accounting, restriction or modification of the attorney in fact’s authority to take certain actions, for the attorney in fact to post a bond, or for the attorney in fact’s removal. These petitions are brought under the Uniform Power of Attorney Act, and can result in the allocation of attorney’s fees in some circumstances.

An estate administrator is an individual appointed to execute a deceased person’s estate plan. Often this person is a family member or other lay person who simply does not have the training or experience to administer an estate of modest complexity. In rarer circumstances, the estate’s administrator lacks the motivation or ignores their duty to act with transparency, or in the best interests of the estate’s creditors or beneficiaries. In such cases, persons interested in the estate may petition the court for an order requiring the administrator to appear and show cause why they should not be removed for waste, neglect, embezzlement or incompetence and replaced by another individual or a professional fiduciary. Contact me or your professional advisor for additional information on the duties of an estate administrator.

Part of a trustee’s fiduciary duty is the obligation to keep the trust beneficiaries informed regarding the income and expenditures of a trust. Though certain trusts can have different requirements, generally, this requires the trustee to deliver an annual report setting forth a written itemized statement of all current receipts and disbursements made by the trustee of the funds of the trust both principal and income, and upon the request of any such beneficiary must furnish the beneficiary an itemized statement of all property then held by that trustee. A trustee must also give notice of “significant nonroutine transactions.” If the trustee fails to report, or give notice, to the beneficiaries as circumstance requires, the beneficiaries may bring a petition to the court to compel an accounting, or for other relief. There are other considerations as well, so be sure to check with your professional advisor for additional trustee obligations.

Unfortunately, people often pass away before they have settled all of their debts, leaving the creditor wondering what action can be taken to collect from the decedent’s estate. In Washington, with some exceptions, pre-death debts can only be collected from a decedent’s estate by properly filing with the court and serving on the estate, a “creditor’s claim” within a certain period of time. The claim must be by the claimant, or her representative, state the address of the claimant or representative, the circumstances constituting the basis of the claim, the amount of the claim and if the claim is secured, unliquidated, contingent, and, if the debt is not yet due, the date when it will become due. Claims improperly or not timely filed can be rejected by the estate and be barred.

Legacy planning must often include thoughtful planning to account for difficult family dynamics. Part of that planning can include the drafting of a no-contest provision in a will or trust document to mitigate the risk of litigation between beneficiaries. Washington recognizes the enforceability of no-contest provisions under most circumstances. Such clauses can effectively disincentivize litigation by penalizing the non-prevailing party in a challenge to an estate plan by reducing or eliminating the challenger’s request. Though so-called “will contest” actions place a strenuous burden on the contestant, no-contest clauses have been broadened in light of increasing instances of litigation to address gifts placed in trust, challenges to beneficiary designations in non-probate assets, the commencement of litigation against a surviving spouse, the commencement of litigation against former fiduciaries and the allocation of attorney’s fees to an unsuccessful contestant.

Oftentimes, an estate has such complexity in its size or type of assets that having a layperson administer the estate is impractical, or family dynamics necessitates the nomination of a neutral outsider. Professional fiduciaries, for a fee, can bring the experience of having administered many estates and draw on the expertise of full time staffers to manage an estate’s assets and liabilities and avoid pitfalls that may not be apparent to a well-intended spouse or family member. If you believe that your estate would benefit from a professional fiduciary you should meet with your estate planning attorney to discuss how to make that designation in your estate planning documents. Your attorney can help you select a suitable individual or entity, whether that be the trust department of a financial institution with which you have an existing relationship or an independent trustee with experience relevant to your portfolio of assets.

There are several things to consider in your planning to reduce this risk. Fiduciaries, such as the personal representative of your estate or the attorney-in-fact named in a power of attorney, have significant powers. Therefore, if you appoint one child as your fiduciary, the children who are not appointed may oppose or resent the child who is. Or if you appoint several children, they may not work well together, which could cause delay and complications in handling your affairs. As a result, in many cases it is advisable to appoint an independent third party as fiduciary. Another area that may cause tension in families is the division of tangible personal property such as artwork or jewelry. Unlike financial assets, tangible personal property can be difficult to divide equally and often carries emotional attachments. You can designate recipients of specific tangible items in your Will or in a separate list, or your Will can specify procedures your children should follow in dividing tangible personal property. We recommend you discuss these issues with your estate planning professional.