[WSBAPT] PR Duty to Respond to Potential Creditors?

Wed Jul 15 17:29:25 PDT 2020

I don't know of any WA authority on the scope of a PR's duty to creditors, beyond the general duty to find the "reasonably ascertainable" ones and send them the appropriate notice, if the notice process is being done. Since even the notice process is voluntary now, I would say that keeps the PR's duties to actually seek out claimants to a minimum.

Once a creditor is identified, the PR definitely has a duty to treat them equally with other creditors, and get them paid in accordance with the order of priority of debt set out by statute.

Occasionally I have seen the idea that the PR's power to reject a claim can be used tactically to try to shed the debt. I think the PR has a fiduciary duty to only reject a debt if there is a colorable defense to it-meet the CR 11 test for having a good faith basis in fact and law or good faith extension or modification of existing law. If the debt appears legitimate, the creditor claim appears to meet the requirements and is timely, I think it shouldn't be rejected.

On the question of weighing a PR's duty to the beneficiaries against the PR's duty to creditors where they might appear to conflict, I don't think there is any case law. If a PR does something to "help" a creditor file their claim, or give them notice beyond what the statute requires, I think that raises the issue of whether that is injuring the beneficiaries. While I don't know of any case law, I think the proper balance would be to give the PR wide discretion to deal with creditors, and make good faith decisions about how to balance the risks and costs of litigation versus compromising or simply paying claimants in full, or even keeping things swift and efficient by providing claim forms and envelopes for creditors to get their claims filed. The PR can take various actions that arguably favor the beneficiaries, or arguably favor a creditor or creditors. So long as there is a good faith basis for it, I think it should not violate a fiduciary duty to either category. But again-no case law I know of.

Personally, in general I think a PR just needs to obey the statute in sending notice to reasonably ascertainable creditors, and leave it at that. No duty to respond to a potential claimant's request for more information, no duty to provide a potential claimant with decedent's SSN or DOB or other identifying information. If a claim is filed, the PR can ask for more information before deciding to accept or reject, and can reject if there is a CR 11 basis for doing so. How aggressively the PR wants to push that line is up to the client; I just advise on the possibilities and make a recommendation on best practice.

Other scenarios: What if PR is surviving spouse and wants to file for family support? That really messes with the creditors. I think a surviving spouse's duty as PR to Estate creditors can't be construed in a way that would limit their statutory right to a family support award. Maybe the PR needs separate counsel for the petition in some unusual circumstances, but in general I think not.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
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Seattle WA 98144-3909
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eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Philip N. Jones
Sent: Wednesday, July 15, 2020 4:45 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] PR Duty to Respond to Potential Creditors?

First, I apologize because I have not followed this entire thread.  Perhaps my question has already been answered:  Way down here in Oregon, there is very little authority on the issue of whether a PR has a fiduciary duty to creditors.  I think there is such a duty.  But little authority exists.  Some practitioners think there is no duty.  Perhaps the answer is a compromise:  To protect the PR against potential liability to an overlooked creditor, the PR should be careful to treat the creditors properly.
Any authority in Washington?
Thanks,
Phil Jones
Portland, OR

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Xan Gerson
Sent: Wednesday, July 15, 2020 10:12 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] PR Duty to Respond to Potential Creditors?

For what it's worth, in a guest lecture to the estate planning class I was teaching, Comm. Velategui said that you are required to send notice of probate to CIR partners.

[cid:image001.png at 01D65AC9.9D1C6B20]

Alexandra (Xan) Gerson
Attorney
206.408.8163
xan at metisestateplanning.com<mailto:xan at metisestateplanning.com>

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Nicholas Pleasants
Sent: Tuesday, July 14, 2020 6:43 PM
To: wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] PR Duty to Respond to Potential Creditors?

Hello fellow probate practitioners,
I have a couple probate hypotheticals for consideration.
First situation: Let's say a creditor was provided Notice to Creditors, the 4-months since publication has passed and the 30-days from delivery to creditor has passed. Now creditor sends a letter asking for a copy of the Notice to Creditors. I don't want to restart the RCW 11.40.030 clock, giving them another month to respond. Does PR have a duty to respond to this potential creditor at all?
Second situation: Let's say decedent may have been in a meretricious relationship. Is the non-spouse partner entitled to any notice of the probate? Let's say non-spouse is not mentioned in the Will at all, not a co-owner of decedent's real property, but possibly there is some tangible personal property owned together. How about notice to creditors as a potential claimant? Obviously PR does not want to encourage potential claimant, and only wants to provide notice as strictly required by statute. Also wondering whether non-spouse partner has any right to request special notice?
I realize that second situation is a bit trickier, as the interplay between Committed Intimate Relationship doctrine and Probate is interesting. I am curious from a notice standpoint what responses you might advise PR to give in these situations. Thanks in advance for any experience you can share.

Best,
Nick

Nicholas Pleasants
Pleasants Law Firm, P.S.
2300 130th Ave NE, Suite A-101
Bellevue, WA 98005-1755
(425) 615-7070 tel/fax
nick at pleasantslaw.com<mailto:nick at pleasantslaw.com>
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