[WSBAPT] Probate Quandary

Thu Nov 21 18:41:26 PST 2019

I disagree that the house should be deeded from the Estate to the surviving spouse BEFORE establishing the Spousal Award via RCW 11.54. Under RCW 11.54.040 the Court has the discretion to INCREASE the spousal award (homestead) to the surviving spouse using the factors listed. I have been successful in having the Court award the entire equity in the house to the surviving spouse, particularly if the surviving spouse is now living on substantially less monthly income because of the death of the first spouse. You give the Court an accurate inventory of all assets and debts and the current financial picture for the surviving spouse. The increased spousal award can wipe out all validly filed creditor claims if the Court finds that the factors are met.  You schedule the hearing on the Petition for the increased Spousal Award and give Notice to all Creditors that have filed claims. 

In one estate, my client and her husband bought a huge RV and used it once. Then he died. She was struggling with the $600+ monthly payments and finally let it go back to the bank with a deficiency after sale of over $25,000. The bank filed a valid creditor claim for the deficiency. I filed a Petition to increase the Spousal Award to give her the house as her spousal award (no debt, worth $200,000). I also disclosed that she had received $50,000 in life insurance. The bank creditor didn't even appear at the hearing. 

My Order included the following language: "The property awarded under this Order is immune from all debts of the decedent and of the Petitioner existing at the time of death except the mortgage debt [and home equity debt] secured by the principle residence of the Petitioner." 

She did get a 1099 miscellaneous income statement the following year from the bank creditor and she had to pay the additional income tax associated with the debt forgiveness, but this was a much better result than having to refinance her home or use exempt life insurance proceeds to pay it off.

Jane G. Bitz
Of Counsel
Wolff, Hislop & Crockett, PLLC
12209 E. Mission Ave, Suite 5
Spokane Vallley, WA 99206-4824
(509) 927-9700 x126
FAX: (509) 777-1800

-----Original Message-----
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Inge Fordham
Sent: Thursday, November 21, 2019 5:34 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Probate Quandary

Assuming the creditor's claim is valid and enforceable, I would recommend having the surviving spouse execute and record a PR deed, then refinance the house and pay the creditor's claim.

Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131

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On 11/21/19, 4:32 PM, "wsbapt-bounces at lists.wsbarppt.com on behalf of Paul Neumiller" <wsbapt-bounces at lists.wsbarppt.com on behalf of pneumiller at hotmail.com> wrote:

    Listmates.  What to do.  What to do.  PR, as surviving spouse, inherited everything from spouse.  Here's the problem.  Outstanding creditor's claim is for a large amount but there is enough equity in the residence that if the PR is able to borrow against the residence, then PR would be able to pay off the creditor in full AND keep the house.  But the banks will not loan to an estate.  Even though if the residence were sold through Probate and the creditor would receive about 50 cents on the dollar (due to administration costs and family award/homestead rights), creditor is extremely uncooperative.  So, how does PR get the residence transferred into PR's name solely so PR can obtain a loan, pay off the creditor, and keep the house?

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