[WSBAPT] Living Trust issue

Sat Apr 22 06:51:10 PDT 2023

That would be an improvement, but section 2203 is limited to the estate tax.
Phil Jones

Get Outlook for iOS<https://aka.ms/o0ukef>
________________________________
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Terry Tassin <tjt at smoklaw.com>
Sent: Friday, April 21, 2023 11:46:50 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Living Trust issue

Phil, would you feel the same were a client to endorse such a check as “executor”?

Your cite:
26 CFR § 20.2203-1 Definition of executor<https://www.law.cornell.edu/definitions/index.php?width=840&height=800&iframe=true&def_id=81afc5f66947a71c56a5decb678db11f&term_occur=999&term_src=Title:26:Chapter:I:Subchapter:B:Part:20:Subjgrp:9:20.2203-1>.
The term executor means the executor<https://www.law.cornell.edu/definitions/index.php?width=840&height=800&iframe=true&def_id=81afc5f66947a71c56a5decb678db11f&term_occur=999&term_src=Title:26:Chapter:I:Subchapter:B:Part:20:Subjgrp:9:20.2203-1> or administrator of the decedent's estate. However, if there is no  executor<https://www.law.cornell.edu/definitions/index.php?width=840&height=800&iframe=true&def_id=81afc5f66947a71c56a5decb678db11f&term_occur=999&term_src=Title:26:Chapter:I:Subchapter:B:Part:20:Subjgrp:9:20.2203-1> or administrator appointed, qualified and acting within the United States, the term means any person<https://www.law.cornell.edu/definitions/index.php?width=840&height=800&iframe=true&def_id=5b6e6898a41e8926772a727414713269&term_occur=999&term_src=Title:26:Chapter:I:Subchapter:B:Part:20:Subjgrp:9:20.2203-1> in actual or constructive possession of any property of the decedent.

--------

Terry J. Tassin, Jr.

Scarborough McNeese Oelke & Kilkenny, P.C.

Five Centerpointe Drive, Suite 240

Lake Oswego, Oregon  97035-8682

Phone: 503.601.3698<tel:503.601.3698>

Fax: 503.601.3699<tel:503.601.3699>
tjt at smoklaw.com<mailto:tjt at smoklaw.com>

On Apr 21, 2023, at 9:52 PM, Philip N. Jones <pjones at duffykekel.com> wrote:

Three questions:
Will a bank accept an unendorsed check being deposited to an IOLTA account?  That would greatly surprise me.
Can an attorney ethically advise a client to endorse a check as PR when the client has not been appointed PR?  That would greatly surprise me.
Can an attorney accept and deposit such a check? That would greatly surprise me.
Phil Jones

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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Joshua McKarcher <josh at mckarcherlaw.com>
Sent: Friday, April 21, 2023 6:24:09 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Living Trust issue

I owe an update on this thread (which I have been working on), but, given this quick exchange today and the word “fruadulent,” I feel compelled to respond to say I cannot see how it is fraudulent NOT to endorse a check and for the depositor’s bank simply to accept that check for deposit to their lawyer-client’s IOLTA account – so long as the bank and its client (i.e., my firm, if I’m the lawyer depositing to my IOLTA) are (as the bank and I must) accept all liability resulting from the wrongful receipt or application of the funds.

But every IOLTA deposit is theoretically subject to dispute. And we have very clear rules about how to handle that if a dispute arises.

And IOLTA funds are often (entirely?), as the rules contemplate, third-party property. This is an issue, in my view, of the lawyer’s judgment, knowledge of his client and the matter, the bank’s comfort and trust of their lawyer-client, the kind and size of check, and other relevant factors that are mostly “risk analysis” factors we all deal with every day.

But if all heirs-at-law are beneficiaries of the trust to which the unprobated will pours over, and the one serving as trustee and nominated PR under the will is also my client (on a “matter”) and has a check payable to Estate of Decedent or even simply Decedent – but does not otherwise have need to probate the pour-over will – then I have found nothing in IOLTA rules or ethical rules (at least so far this week) that makes it wrong in any way for the lawyer to deposit the check to his or her IOLTA account (if the bank agrees to accept it, which the bank is 100% not obligated to do; see, e.g., Heather’s bank’s change of heart).

It is then the lawyer’s (and his client’s) obligation to account for the receipt of those funds; and then to apply those funds properly. In my example that would be by ensuring the funds end up with the beneficiaries entitled to the trust’s assets by virtue of the unprobated (but perhaps filed) will that nominates my client as PR and pours over to the trust of which that PR is also trustee.

(The point there: I am not depositing funds subject to administration by someone else who is not my client on a “matter.” Not at all.)

I can expand more later re my position that Western law supports the idea that a decedent’s gross, worldwide, generic, lowercase “e” estate consists of all property worldwide that is individually titled and subject to various jurisdictions’ individual probate or administration statutes.

That (generic, worldwide, lowercase “e”) “estate” property is all the decedent’s property (1) not titled to a trust and (2) not subject to nonprobate transfer under contract and other applicable law (such as IRAs, TODs/PODs, life insurance with beneficiary designations).

Assets that comprise that generic, worldwide “estate” could be subject to 15 different jurisdictions’ probate laws. Imagine real property parcels in 15 different states (and poor planning, ha ha!). That could result in 15 state probate court proceedings technically “titled” In re Estate of Decedent, but that simply creates 15 separate “sub-estates,” each consisting of the property subject to each separate state’s probate laws.

But what if the HOME state has no real property and NOTHING requiring Letters Testamentary for administration? Is there really no estate in the home state? Until this exchange, I never would have dreamed our profession would argue, “Yes, there is no estate in that home state until a PR is appointed there or a small estate affidavit is signed and filed there.”

I respectfully suggest that Western law generally (and Washington law specifically) will not likely bear out that there is simply “no estate” anywhere until a court-appointed PR is appointed somewhere. There is indeed no “Estate of Decedent under Case No. XYZ123 in Washington Superior Court for County ABC,” but there is an “estate” – property that belongs to someone deceased that needs to be received and applied properly and efficiently and sensibly.

Of course the will could be probated, or a small estate affidavit could be presented, but if a payor of $35 in insurance premium refunds (payable to Estate of Decedent) or $75 of federal income tax refund money (payable to Decedent) does not WANT the protection/indemnity provided to them by acceptance and retention of the small estate affidavit, then I just do not believe lawyers are committing fraud by depositing either check to their IOLTA accounts with no endorsement by anyone.

And the following is NOT a “justification” in any way, so proving this wrong does not prove my assertions wrong, but test the assertion against what IOLTA rules are about: a lawyer could use his IOLTA account all day long to deposit checks properly endorsed by his/her client respecting a matter on which the lawyer advises the client -- and NOT APPLY THE FUNDS correctly. Or perhaps he knows/suspects the client-endorser RECEIVED the funds improperly. I believe the law would support the position that it is the receipt and application of client trust/IOLTA funds, not the endorsement of checks, that the law regulates or intends to regulate.

And, please do not forget: nothing I’m advocating relieves anyone involved of liability and accountability – or even documentation obligation – for the receipt and application of those funds. I maintain 100% obligation and accountability for every little check like this. And I have 0% problem with that, because of how I screen and choose my clients.

All my very best regards, and have a great weekend everyone! 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 Philip N. Jones
Sent: Friday, April 21, 2023 12:29 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Living Trust issue

I don’t see any ethical issues, except one:

Who is going to endorse the check, and how are they going to endorse it?  We can’t ethically advise our client to sign as PR when the client is not a PR.

Some attorneys say to their clients, “I can’t ethically advise you to do X.  Wink.  Wink.”  Knowing full well that the attorney just gave the client an idea of what to do.  And the attorney can then use “plausible deniability” to claim that he/she did not advise the client to do X.

But in this case, the attorney will be placing the funds in his/her IOLTA account.  Difficult to plausibly deny that the attorney participated in an action that might be viewed as fraudulent.

Phil Jones

Philip N. Jones

Duffy Kekel LLP

900 S.W. Fifth Ave. Suite 2500

Portland, OR 97204

pjones at duffykekel.com<mailto:pjones at duffykekel.com>

(503) 226-1371 – office

(503) 853-1482 – cell

(503) 226-3574 - fax

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 Timothy Lehr
Sent: Friday, April 21, 2023 12:03 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Living Trust issue

Wondering if there would be any ethical violations/issues with depositing the check in an attorney trust account and re-issuing to the trust? This was just off the top of my head and I have not looked into any issues that might be involved, so don’t quote me on the above as a proper or ethical solution…

Timothy C. Lehr

Attorney & Partner

<image001.jpg>

p:   360.855.0131

e:   timothy at stileslaw.com<mailto:timothy at stileslaw.com>

w:  www.stileslaw.com<http://www.stileslaw.com/>

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From: Philip N. Jones <pjones at duffykekel.com<mailto:pjones at duffykekel.com>>
Sent: Thursday, April 20, 2023 2:39 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Living Trust issue

That’s because I grew up in Lake Forest Park and drank the water (literally, out of a well).

Phil Jones

Philip N. Jones

Duffy Kekel LLP

900 S.W. Fifth Ave. Suite 2500

Portland, OR 97204

pjones at duffykekel.com<mailto:pjones at duffykekel.com>

(503) 226-1371 – office

(503) 853-1482 – cell

(503) 226-3574 - fax

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 Roger Hawkes
Sent: Thursday, April 20, 2023 2:25 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Living Trust issue

Phil; you clearly have good genes on one side at least.

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 Philip N. Jones
Sent: Monday, April 17, 2023 5:48 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Living Trust issue

This is a problem we all run into constantly.

I doubt a bank will open an estate account without Letters Testamentary.

Does the client happen to have an account that is joint with Mom?  Perhaps you could deposit the check to that account, but some banks will not let you do that if they know that Mom has died (and the check, after all, is made out to her estate).  Some people suggest using a night deposit slot so that there won’t be a teller to ask questions, but I am told that the banks scrutinize such deposits just like any other.

Is client on good terms with a bank teller who might look the other way and deposit the check to an account in the name of the trust?  Or in the name of Client/Child?

This check might be particularly difficult to deposit since it is made out to the estate.  Might be a little bit easier if it were made out to Mom.

Be careful about advising Client to endorse the check and writing “personal representative” under her signature.  Client is not a personal representative, and you don’t want Client to do anything fraudulent.

I have now run out of ideas.  And none of the above ideas are very good ones.

If it gives you any comfort, I had the exact same problem a couple of months ago when my Mom died.  She was 101 and had covered the Roosevelt White House as a cub reporter.

Welcome to modern banking,

Phil Jones

Philip N. Jones

Duffy Kekel LLP

900 S.W. Fifth Ave. Suite 2500

Portland, OR 97204

pjones at duffykekel.com<mailto:pjones at duffykekel.com>

(503) 226-1371 – office

(503) 853-1482 – cell

(503) 226-3574 - fax

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 Jenna Brozik
Sent: Monday, April 17, 2023 5:30 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Living Trust issue

Hello list mates,

Client’s mother passed away and the mother had a living trust.  Client is the Trustee of the Living Trust and only beneficiary.  All assets were titled in the Living Trust. However, client received a check in the mail after mother passed away.  Apparently the mother overpaid her healthcare premium and the company issued her a check for the overpayment.  The check is made out to the Estate.  Client called to ask company to make it out to Living Trust.  Company has refused. Company has refused to reissue the check under any name.

Should client just open up a bank account under the Estate to get this check deposited?  No probate is necessary in this case.  Any suggestions would be appreciated.

Jenna Brozik

Managing Attorney

PRINZ & BROZIK PLLC
445 S. Grand Avenue
Pullman, WA 99163
509-338-0908 Telephone
509-338-3527 Facsimile

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