[WSBAPT] allocation of settlement

[Eric Nelsen]

Since the WD settlement funds are in the hands of the PR, I think the S/L would be the same as for any alleged breach of fiduciary duty by a PR. See RCW 11.96A.070<https://app.leg.wa.gov/RCW/default.aspx?cite=11.96A.070>(2), which appears to require filing suit prior to "discharge of the PR" which typically happens at closing of the probate.

However, keep in mind that under case law, due process considerations require that in order for an interested party to be bound by the discharge, they must have received notice and an opportunity to be heard. So that "wild card" kid needs to be given proper notice of the Declaration of Completion in order to cut off a potential suit. See In re Estate of Little, 127 Wn.App. 915, 921, 113 P.3d 505 (2005); In re Estate of Walker, 10 Wn.App. 925, 930, 521 P.2d 43 (1974); Hesthagen v. Harby, 78 Wn.2d 934, 942, 481 P.2d 438 (1971).

For an interested party who does not receive notice, I think it's standard 3-year S/L for breach of fiduciary duty, and probably would be subject to the discovery rule so depending on the circumstances, it might a long time before the PR would be safe from suit by an interested party without notice of the settlement.

You didn't ask, so this is pure bloviating, but: I have puzzled about what the scope of a PR's fiduciary duty to determine allocation among the statutory beneficiaries, and what to do about the conflict of interest if the PR is one of the beneficiaries. Wrongful death proceeds are not allocated by the intestacy statute because they aren't inheritance but rather damages incurred by beneficiaries. The measure of damages for a beneficiary in a wrongful death suit is determined essentially by the strength of the beneficiary's relationship with the decedent: loss of love, care, affection, support, etc. So if the kid was estranged from the parent, that arguably entitles that kid to less of the settlement compared to a child who had a closer relationship with the parent. Furthermore, there is no governing equation that automatically determines the proportion between a surviving spouse and surviving children.

It's a big can of worms to ask "who loved dad best?" so I think most people just default to equal shares among kids, and maybe divide the proceeds with half or more going to a surviving spouse and the rest divided among the kids. I am merely noting that it's not a required outcome, and I have had a settlement approved where two estranged children of the decedent received a significantly smaller portion of the settlement compared to the third child (who was also the named Executrix of dad's estate and had been very close to her father). I think if the PR is a beneficiary you might need to evaluate with the PR the cost/benefit of petitioning the court for approval of a specific proposed allocation of settlement funds. That would remove any question regarding a breach of fiduciary duty by conflict of interest.

In your specific case, it sounds like you have a strong emotional case for mom getting the entire settlement, because three of the four children agree with that. But if it comes to be contested, it might be better to, say, have some small portion allocated to the four kids, and then let the kids later gift their settlement to their mother. If the court were confronted with three children who agree that their individual portion of the settlement is $X, that would be strong evidence to conclude that the fourth child should get no more than $X.

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Krista MacLaren
Sent: Monday, March 11, 2019 11:14 AM
To: Solo and Small Practice Section; wsba probate & trust
Subject: [WSBAPT] allocation of settlement

Hi Folks,

I am wondering if you know the statute of limitations on disputing allocation of settlement funds in the context of a probate and RCW 4.20.020.

For example, surviving spouse would have received all of estate under laws of intestacy, because it was all community property, but there was a wrongful death claim that was settled without suit, with no discussion about whether the 4 adult children should receive any share of the settlement.

Three of the adult kids are big advocates of their mom and want her to have it all.  The other kid has many problems, is somewhat estranged, and a wild card.  It seems potentially safer to not pursue a TEDRA with that child, but if they kept it quiet, when would they be home free as to the problem child?

I appreciate any insight you have!

Krista

Krista J. MacLaren
Attorney at Law
Northgate Executive Center II
9725 3rd Ave NE, Suite 600
Seattle WA 98115
(206) 523-6116
kjm.inc at icloud.com<mailto:kjm.inc at icloud.com>

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