[WSBAPT] Odd Probate

Fri Jan 12 16:22:41 PST 2018

Thank you, John, for your response to my question yesterday. To answer your additional questions,

> What we need to know is the provisions of the RLT during the inter-mortem period. Was it not fully revocable by the husband? Did it mandate a split of up to her lifetime exemption into an irrevocable credit shelter trust?

The Trust was revocable during that time, but the wife died 12 days after executing the Trust documents. Nothing was done.

> The HEMS standard doesn’t make sense if it’s revocable. If it’s revocable and no split I donate see the point in getting upset about bypassing the RLT. But if her share was to be controlled through irrevocability that’s another matter. 

The terms of the Trust provide for division and distribution of the personal property at the death of the first spouse and division of the residue into a Survivor’s Trust and Family Trust. The client states that at the time of his wife’s death he was struggling to get his business up and running and there was no money available for anything. Client recalls that at the time of the probate (4+ years later) a CPA valued his wife’s 20% interest in his company at $300,000, although he states his company has increased in value since then and currently has a value of $1 million. Obviously these figures do not align with a Community Property Agreement (which is in the paperwork but unsigned or the signature page is missing) that would create a 50/50 division of all assets of both parties. 

> Did the DOC disclose where the estate was distributed? That might matter in terms of tolling the SOL. 

The probate was simply opened and then closed. No distributions were made. The client recalls that the purpose of the probate was to transfer the house into his name and take the deceased wife’s name off. He indicates that he paid off the mortgage at that time.

At this point, what do we do with this terribly drafted Trust with key elements unsigned and nothing funded? The language is so poorly drafted I can barely make sense of it, and it seems to give significant if not total discretion to the surviving Trustee to determine the shares to go into the two Trusts. It ultimately states that at the death of the second spouse, the Survivor Trust and the Family Trust are to be distributed to the wife’s daughter and grandchildren. 

The surviving spouse is currently 57 years old and in good health and wanting to re-marry and provide for his new wife at his death.

Thanks in advance for your help with this mess.

Amy

Amy J. Goertz, J.D.
Goertz & Lambrecht PLLC
amyjgoertz at icloud.com <mailto:amyjgoertz at icloud.com> 

1.888.926.2607 phone
1.877.684.1627 fax

Address for correspondence:
2829 S. Grand Blvd., Suite 303
Spokane, WA 99203 

Additional office locations:
510 Bell Street
Edmonds, WA 98020

7418 East Helm Drive
Scottsdale, AZ 85260

Goertz & Lambrecht PLLC
Lambrecht Dispute Resolution LLC
www.goertzlambrecht.com <http://www.goertzlambrecht.com/>
www.lambrechtdisputeresolution.com <http://www.lambrechtdisputeresolution.com/>

> On Jan 11, 2018, at 8:19 PM, John J. Sullivan <sullaw at comcast.net> wrote:
> 
> Amy:
> 
> I’ve seen too many unfunded RLTs. It’s not surprising that a probate of a pour over will is a summary matter, although not waiting for the four month will contest and creditor claims periods to expire is probably poor form. But maybe the daughter acquiesced and the husband decided he’d be responsible if a claim came in. 
> 
> What we need to know is the provisions of the RLT during the inter-mortem period. Was it not fully revocable by the husband? Did it mandate a split of up to her lifetime exemption into an irrevocable credit shelter trust?
> 
> The HEMS standard doesn’t make sense if it’s revocable. If it’s revocable and no split I donate see the point in getting upset about bypassing the RLT. But if her share was to be controlled through irrevocability that’s another matter. 
> 
> Did the DOC disclose where the estate was distributed? That might matter in terms of tolling the SOL. 
> 
> John Sullivan
> 
> Sent from my iPhone
> 
> On Jan 11, 2018, at 5:01 PM, Amy Goertz <amyjgoertz at icloud.com <mailto:amyjgoertz at icloud.com>> wrote:
> 
>> Good afternoon, Listmates,
>> 
>> I have a potential estate planning client who brought in one of those huge four-inch thick Estate Planning Portfolios to review. He and his wife married in 2009 after 20+ years together. Wife had an adult daughter and four grandkids; husband has no children. About a month after the marriage, they had the Portfolio prepared by a local attorney. They signed Revocable Living Trust documents and Pour Over Wills, but the Trust was not funded. They were provided paperwork to fund the Trust, but it was unsigned. In November 2009, about a week after signing the documents, the wife went in for a biopsy and died on the operating table. 
>> 
>> Years later, on May 21, 2013, a different local attorney initiated probate proceedings, had said client appointed as PR, and sent a Notice of Appointment to the wife’s (adult) daughter. Two weeks later, on June 3, 2013, the attorney filed a Declaration of Completion of Probate, and again sent Notice to the wife’s daughter. Affidavits of Mailing are on file. Client states that the Trust was not funded and everything was transferred to him.
>> 
>> The Pour Over Will admitted to probate provides for all property to go to the Trust and, if Trust is not in effect for any reason, then as a Testamentary Trust with the same terms. The Trust provides for “no restrictions” on distributions of income or principal to the spouse as deemed advisable in the Trustee’s (spouse) sole discretion for the health, education, maintenance and support. On the death of the second spouse, the Trust provides for some significant specific bequests and residuary distribution to the wife’s daughter (20%) and her children (80%).
>> 
>> Client has possession and control of approximately $1million and is planning to remarry. He wants to leave his house and significant funds to his new wife. He also wishes to sell his business and has a tentative deal to sell the business for $1 million. He says he gave 20% of his company to his previous wife.
>> 
>> I’ve never seen such a bizarre two-week probate or an outright disregard for the terms of the Will. Now nearly five years have passed and no objection was filed. The client is 57 years old so could potentially live for a very long time.  If the Trust was not funded upon the wife's death eight years ago or during the probate five years ago, has the statute of limitations passed for objecting to the distributions? How can we remedy this situation so that we are certain of what terms to follow?
>> 
>> Thanks in advance - sorry for the lengthy post.
>> 
>> 
>> Amy J. Goertz, J.D.
>> Goertz & Lambrecht PLLC
>> amyjgoertz at icloud.com <mailto:amyjgoertz at icloud.com> 
>> 
>> 1.888.926.2607 phone
>> 1.877.684.1627 fax
>> 
>> Address for correspondence:
>> 2829 S. Grand Blvd., Suite 303
>> Spokane, WA 99203 
>> 
>> Additional office locations:
>> 510 Bell Street
>> Edmonds, WA 98020
>> 
>> 7418 East Helm Drive
>> Scottsdale, AZ 85260
>> 
>> Goertz & Lambrecht PLLC
>> Lambrecht Dispute Resolution LLC
>> www.goertzlambrecht.com <http://www.goertzlambrecht.com/>
>> www.lambrechtdisputeresolution.com <http://www.lambrechtdisputeresolution.com/>
>> 
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