[WSBAPT] Will Question - life estate

Sun Sep 11 14:12:32 PDT 2022

You are just a rock star. I love it! I put this kind of long list into my trust re "the house," and once the client(s) read it, they never say, “That’s too long. Trim it indiscriminately to satisfy my perception that it should be ’simple.’” (Only other lawyers have ever told me that, but alas.)

Instead, clients say, “Oh, wow. Right. I/we never thought of all that.” And then they think about a couple of them and talk about it aloud, and we/they are “there” — engaged and thinking about the ramifications of the whole thing.

And if they change their mind, it’s because they chose to, because they realize that sometimes life just isn’t “simple” like humans wish it was. Not because I talked them out of it.

Top Contributor Award to Mr. Nelson! You're a bottomless supply of useful information and opinion!

Happy Sunday! Best, Josh

Joshua D. McKarcher
McKarcher Law PLLC
537 6th Street
Clarkston, WA 99403
(509) 758-3345
(509) 758-3314 (fax)
josh at mckarcherlaw.com
www.mckarcherlaw.com<http://www.mckarcherlaw.com>
________________________________
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Eric Nelsen <eric at sayrelawoffices.com>
Sent: Sunday, September 11, 2022 2:10 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Will Question - life estate

Following on Bruce and Joshua, here’s my list of things that have gone wrong with life estates in my experience, which I turned into a reminder list of what to think about when drafting a trust to take the place of a life estate:

            gift is only a right to occupy and is conditioned on fulfilment of all conditions herein. right to occupy is not assignable and may not be shared except for casual overnight visiting guests.
            gift includes right to occupy without payment of rent during pendency of probate, but during pendency of probate the beneficiary must cooperate in allowing access to the property to the full extent the PR finds it necessary or convenient, at any time, upon 12 hours' oral or written notice or no notice in case of emergency.
            gift is not a life estate. the gift is intended solely as an accommodation to my partner to allow her/him to continue to live at the property where we lived together. my intent is for all value of the real property to pass to my residue heir subject only to this limited right to occupy which has no market value, for the full value of the property to be preserved for the residue heir, at occupant's expense during occupancy, and without any financial burden on my estate or residue heir during occupancy.
            right to occupy is not exclusive as against the estate (not residue heir) retains rights to enter and inspect to the same extent as a tenant-in-common, and estate may store tangible personal property that belonged to decedent at time of death until probate is closed.
            right to occupy belongs to partner only and may not be extended to any overnight guests for longer than seven (7) days out of any six (6) week period; provided, partner may have a paid in-home licensed and certified caregiver
            occupancy defined as: actually occupying the home on an overnight basis for at least five weeks out of every ten weeks [except winter snowbird? except up to 90 days if hospitalized or in convalescent care?].
            estate has a right to maintain exterior surveillance cameras and other equipment to keep house secure and monitored.
            must pay for reasonable maintenance and repair. scope of reasonable maintenance and repair includes without limitation maintaining roof secure from leaks; maintenance of exterior envelope against water leaks; repair or replacement of refrigerator, oven/range, washer/dryer, microwave; regular mowing and trimming of yard and curtilage; [etc.]
            must pay all property taxes when due.
            must pay all utilities when due.
            must pay for and maintain homeowner insurance for full replacement value of the house, naming residue heir as insured; shall cover for fire, and flooding if necessary, but not responsible for earthquake coverage; shall include inflation rider to maintain full coverage; occupant to select the company with residue heir's approval, which approval shall not be unreasonably withheld.
            residue heir has right to direct access to and communication with insurer
            must pay mortgage?
            if estate has insufficient other assets to pay all costs of administration and lawful claims against the estate, then estate may sell the house and substitute a gift to occupant calculated as $X per year by actuarial table of occupant's life.
            residue heir to have right to routinely inspect the property no more often than semi-annually upon 48' hrs notice to occupant, and additional right to enter at any time without notice in emergency to preserve property value
            residue heir right to receive annual accounting relating to payments, maintenance and repair
            notice of default and opportunity to cure, residue heir to have right to issue
            residue heir to have right to use unlawful detainer procedure for failure to meet requirements, award of atty fees to prevailing party
            Must maintain the home in a clean and orderly condition and not allow the cleanliness of the home to deteriorate to the point of unsanitary conditions or unsafe conditions because of accumulation of personal property (hoarding).
           Must have estate's permission to have [or continue to have or add to number of] pet(s) on the property and must prevent damage to the interior or exterior yard of the home caused by the pet(s).

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Joshua McKarcher
Sent: Saturday, September 10, 2022 12:07 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Will Question - life estate

Hi Dalynne,

I'm not sure if Bruce was gently encouraging you away from a life estate solution 😉, but I "do these" in trust with separate plain English paragraphs about what happens if wife dies first vs if husband dies first.

A judge can read that, hear the facts, and make a reasonable judgment if needed, if there is a problem. No overlay of decades of complex life estate case law required.

Agreed post-signing changes require no vesting and title review and no excise tax mental gyrations. No reference to life estate rules and case law and "all of it." Agreed changes require a simple signed paper meeting the requirements of a trust amendment or TEDRA agreement, whichever is applicable.

Well drafted trust provisions, in my mind, are far better solutions than life estates. I'm guessing others out there have mastered doing this with life estates with some additional language on the face of the deed or a side agreement or something. If so, no problem. This is my bias.

If wife survives, she can be trustee; and maybe they don't mind if she retains the right to cut son out then if he goes sideways. Most husbands in this scenario sitting in my office would say, "Of course she can change her mind! It's me we don't want changing his mind."

If husband survives, he and son can be co-trustees perhaps, although husband can still be sole trustee, but with the duty to follow the trust. A duty enforceable by the son in the same superior court they'd end up in with a life estate -- but in a simpler TEDRA action intended to instruct a trustee based on well-drafted plain English trust provisions vs life estate case law.

Write in plain English in each paragraph noted above what happens if one of them sells before both are dead — who gets the money? Think through the scenarios and do not leave anything to two (non-spouse) people who must unanimously agree -- that's just begging for deadlock. Judges need simple clear language they can hopefully enforce without too much rigmarole when someone simply refuses to abide the trust agreement because they've changed their mind.

Then make darn sure husband knows that, if he survives wife and is sole trustee, he has fiduciary duties to FOLLOW the trust or he WILL LOSE in court if son or son’s guardian, etc., sue to enforce. Heck, have them recite in a purpose paragraph near the beginning of the trust what they intend by the provision further down in the trust and that they expect it to be enforced as provided. There is no law against him having a companion live there, so long as he doesn't trash the place, purport to title it to the companion, sell it without abiding the trust, etc.

If I set these couples up with clear expectations and understandings about their duties to "follow this OR YOU WILL LOSE IN COURT, and you will need a different lawyer than me to 'break' this thing," then I see their mental assent and the "click" in their brain. Then they read the plain English "rule book" in the trust provisions re the house. They "get it" and sign it -- and then I've had zero problems when it comes time for it to "work."

Good luck! All the best, 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>
www.mckarcherlaw.com<http://www.mckarcherlaw.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 Bruce Moen <brm at moenlaw.com<mailto:brm at moenlaw.com>>
Sent: Saturday, September 10, 2022 12:22 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Will Question - life estate

Hi Dalynne,

You are not overthinking this.  The life estate is a simple concept, but are the subject of many issues we which arise in the years following the conveyance.

If you decide to create the life estate for your client(s), then I suggest that you survey the case law of litigation between life estate holders and the persons with a remainder interest. Organize the litigation into subdivisions such as economic waste (failure to maintain the property), damages (house burns down and the life tenant and the remainderman each mistakenly thought that the other had it insured), allocation of short-term vs long term repairs for an elderly life tenant, many other issues.  After you have catalogued the areas of disputes, then review each area with the client and what to draft for each area.  I think that's the best that we as lawyers can do.

Important caveat: When the client says "Oh, my [spouse], [issue], [others] would never do that." Remind the client that that any of the players may change and have no control over the issue.  An example would be that a trusted family person has a stroke or a head injury and ends up with a Conservator or a GAL who is ready to litigate over some past event. The client's focus during the consultation should be shifted from the trusted family member to strangers who may stand in their shoes at some point.

Good luck!

  Bruce Moen

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 Dalynne Singleton
Sent: Saturday, September 10, 2022 10:24 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Will Question - life estate

I have some Wills I am preparing and wanted to see how others might approach this situation.
Clients are married (wife 4th marriage, husband 1st).  Wife has one grown son, Husband had no children.
H/W own a home on Camano Island jointly.  They both want son to receive home when second spouse dies.  But, when first spouse dies, H or W will continue to reside in home until they move or die, or house is sold.

I am considering recommending a life estate transfer of the home to the son with life estate in H/W.  Both H/W in their 60s and health is good.
This seems better than placing the CP interest of the first spouse into a trust for the benefit of the surviving spouse where upon the 2nd spouse to die death, the house goes to son.
If house is sold before 2nd spouse dies, CP interest monies will be paid to the son.

The fear is from the wife if she dies first, her husband will remarry and not provide son with her share of CP home – doesn’t life estate to both H/W with deed to son handle this issue?
What if after deed with life estate, H/W sell home?  Will the son then be entitled to any monies from sale?  How to protect the H/W in this case?
Am I overthinking this?

Dalynne Singleton
Gourley Law Group
Snohomish Escrow
The Exchange Connection
1002 10th Street / PO Box 1091
Snohomish, WA 98291
360.568.5065
360.568.1717  fax
dalynne at glgmail.com<mailto:dalynne at glgmail.com>
Website:  www.glglawgroup.com<http://www.glglawgroup.com/>
As we face the challenges presented by COVID-19, Attorney/client meetings will be handled by teleconference or virtually whenever possible.  I am working remotely and available by email, telephone, in-person or zoom.  If you would like to set a conference with me, please call or email my paralegal theresa at glgmail.com<mailto:theresa at glgmail.com>, angelina at glgmail.com<mailto:angelina at glgmail.com> or cameron at glgmail.com<mailto:cameron at glgmail.com>.
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