[WSBAPT] PR Duty to Respond to Potential Creditors?

[Joshua McKarcher]

I understand a trustee/PR owing fiduciary duty to beneficiaries/heirs/devisees, which suggests a duty to deal fairly, openly, and wisely with creditors to minimize risk and cost to the trust/estate and its beneficiaries.

E.g., I push clients to give actual notice to known and ascertainable generously to cut off claims promptly – after promptly paying in full all valid claims. This is proper and is loyal to the beneficiaries (because it keeps them from trouble). But then I do not give creditors more information than the notice requires if they call asking questions. I would at most maybe send an inquiring creditor a copy of my long-ago-filed affidavit to the court listing all the known and ascertainable creditors we sent notice to, which has a copy of that notice as exhibit A. Let them figure it out from there. (I would be more willing to send that if their name/address appeared on it.)

I could perhaps imagine a fiduciary duty to creditors arising in an insolvent estate. I would borrow this from (Delaware but maybe now more) corporate law, which I believe recognizes duties owed to shareholders – and only any level of duty to creditors as the corporation passes (not even as it approaches) the “zone of insolvency” – i.e., only once the entity firmly is insolvent. (I had to dissect the seminal Delaware case North American Catholic Educational Programming v. Gheewalla (Del. Supr. 2007) for a partner back in the day. I gather it’s still good law (https://corpgov.law.harvard.edu/2020/04/15/director-fiduciary-duty-in-insolvency/).)

I just don’t presently see how a trustee/PR owes a fiduciary duty to creditors of a solvent estate, but I respect that there are surely arguments I haven’t considered.

Best regards, Josh

Joshua D. McKarcher
McKarcher Law PLLC
537 6th Street
Clarkston, WA 99403
(509) 758-3345
(509) 758-3314 (fax)
josh at mckarcherlaw.com<mailto:josh at mckarcherlaw.com>

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 01D65AD1.42FF4A60]
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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