[WSBAPT] Family Support Award of house with negative equity

Fri Apr 22 09:00:10 PDT 2016

This brings up a related question I have. Regarding an increase in the
award, my reading of RCW 11.54.040(1) is that an increase is only warranted
if an increase is necessary to provide for the surviving spouse's basic
maintenance and support during the pendency of the probate and that the
anticipated future needs of the surviving spouse after the probate is closed
are not to be considered.  Therefore, a creditor affected by the requested
increase in the award could object to the increase to the extent it was
based on the anticipated future needs of the surviving spouse beyond the
estimated date when the probate will be closed.  Am I reading that
correctly? 

Increase in amount of award-Factors for consideration.

(1) If it is demonstrated to the satisfaction of the court with clear,
cogent, and convincing evidence

that a claimant's present and reasonably anticipated future needs during the
pendency of any probate

proceedings in the state of Washington with respect to basic maintenance and
support will not

otherwise be provided for from other resources, and that the award would not
be inconsistent with the

decedent's intentions, the amount of the award may be increased in an amount
the court determines

to be appropriate.

Sincerely,

Jon M. Fritzler

Attorney at Law

PO Box 61451

Vancouver, WA 98666

Tel. 360.818.4431

Eml fritzlerlaw at outlook.com <mailto:fritzlerlaw at outlook.com> 

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From: wsbapt-bounces at lists.wsbarppt.com
[mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jane Bitz
Sent: Friday, April 22, 2016 7:19 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Family Support Award of house with negative equity

Eric: 

I think your analysis of this situation is correct. I haven't zeroed out a
home value in the past but I have used home loan debt to reduce the value so
that cash can be included in the award. 

Remember that the court can increase the award to the surviving spouse based
on the statutory  factors. I always try to argue an increase because the
basic award alone would have lots of people forced out of their homes or
keeping their homes with no cash at all. 

Jane Bitz

Sent from my iPhone

On Apr 21, 2016, at 4:33 PM, Eric Nelsen <Eric at sayrelawoffices.com
<mailto:Eric at sayrelawoffices.com> > wrote:

Married couple with a house with slight negative equity due to multiple
mortgages. One dies. There is sufficient cash in the estate to allow a
family support award to the surviving spouse in the full amount of $125,000.
There are numerous community creditors that would completely exhaust the
$125,000, if it is not protected by family support award.

My thought is to make the family support award of (1) the house, subject to
existing encumbrances as required by the statute, meaning that its "value"
for purposes of calculating the family support award is zero; and (2)
$125,000 in cash.

To my mind, that would mean that the house is protected from any unsecured
creditors, and if it increases in value, any equity that results would
remain protected from creditors.

Similarly, there is the possibility that one of the mortgages, a private
loan, will become unenforceable in another year or so due to statute of
limitations, at which point the mortgage can be stripped via quiet title.
That results in even more equity - again, protected from creditors.

Is this kosher? Since the award is limited to $125,000 in value, can you
effectively load the family support with "zero value" assets that might
later appreciate?

Sincerely,

Eric

Eric C. Nelsen

SAYRE LAW OFFICES, PLLC

1320 University St

Seattle WA  98101-2837

phone 206-625-0092

fax 206-625-9040

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