[WSBAPT] level of distrust/animosity of PR reason for removal

Thu Oct 5 11:04:44 PDT 2023

Thanks for this.

Diane J. Kiepe
Douglas Eden, P.S.
717 W. Sprague Ave., Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

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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, October 4, 2023 1:09 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] level of distrust/animosity of PR reason for removal

I have spent a lot of time researching and thinking about the ability of a beneficiary to seek removal of a trustee due to an alleged conflict of interest.
Although most of my research has been in Oregon, I believe that the rule is generally the same in Washington.  In short, I believe that a mere conflict of interest is not a valid ground for the removal of a trustee.  For example, I would be permitted to serve as the PR of my mother's estate even though my primary job is to divide the estate equally among me and my seventeen sisters.  That presents a conflict, but not one that would justify my removal.
The Hamlin case, cited below, was an unpublished opinion reversing a lower court's granting of a motion for summary judgment.  Of course, an order granting summary judgment is often (and easily) reversed, because all the appellant needs to do is raise an issue of material fact.  And the Hamlin opinion did not remove the trustee; it merely held that a trial should be held to determine whether the alleged conflict (and the alleged actions of the trustee motivated by that conflict) were sufficient to justify removal.  Maybe they were.  Maybe they weren't.
Attorneys are not allowed to have conflicts.  But fiduciaries can.
In short, I believe that there is a relatively high bar for trustee removal, and the mere existence of a conflict does not rise to that level.
Below is some research I did for a CLE talk on this subject.  Your mileage might vary.
Phil Jones

            A conflict of interest on the part of the trustee is not necessarily grounds for removal.  For example, oftentimes the trustee is also one of several beneficiaries of the trust, as pointed out by the comments to ORS 130.655.  The Third Restatement of Trusts, §37, Comment f(1), states:

Thus, the fact that the trustee named by the settlor is one of the beneficiaries of the trust, or would otherwise have conflicting interests, is not a sufficient ground for removing the trustee or refusing to confirm the appointment.  This is so even though the trustee has broad discretion in matters of distribution and investment.

            Also, there is a "strong statutory and common law preference to defer to the designation of a personal representative made by the testator." Holst, 117 Or App 307, 311 (1992).

            However, in some cases the conflict of interest is so fundamental that removal of the fiduciary is warranted.  Wharff v. Rohrback, 152 Or App 68, 73-74, 952 P2d 87 (1998).  In the Wharff case, one of the duties of the personal representative was to consider suing herself for causing the wrongful death of the decedent.  The court held that the personal representative should be removed because that conflict was sufficiently substantial to justify removal.  In Vander Galien v. Vander Galien, 47 Or. App. 233 (1980), the mother of the decedent was appointed as personal representative after mistakenly representing to the court that the decedent did not have a spouse, who would have had preference for appointment under ORS 113.085.  In addition, a conflict of interest was present, or was likely to be present.  The court held that a combination of the conflict and the error in the appointment of a non-preferred person justified the removal of the personal representative.  In Faulkner's Estate, 156 Or. 23 (1937), Elder's Estate, 160 Or. 111 (1938), and Bean v. Pettengill, 57 OR. 22 (1910), the personal representative was removed because a conflict was present between the personal representative and the estate, due to the personal representative's misappropriation, concealment, or fraudulent transfer of estate assets.  When those factors were not present, and the alleged conflict was less substantial, the Court of Appeals declined to remove the personal representative.  Roley v. Sammons, 215 Or. App. 401 (2007).  See also Schaad v. Lorenz, 69 Or. App. 16 (1984).

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 Shannon Jones
Sent: Wednesday, October 4, 2023 11:01 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] level of distrust/animosity of PR reason for removal

As relates to a fiduciary (trustee):
A Trustee may be removed and a successor appointed for reasonable cause, which may include a conflict of interest between the trustee beneficiary and other trust beneficiaries. See RCW 11.98.039 and also Waits v. Hamlin, 55 Wn.App. 193, 776 P.2d, 1003 (1989).  A court has discretion to remove a trustee on the ground that bad will or ill feeling between the trustee and the beneficiaries would be detrimental to execution of the Trust. See Fred Hutchinson Cancer Research Ctr v Holman, 107 Wn.2d 693, 732 P.2d 974(1987).

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 Diane J. Kiepe
Sent: Wednesday, October 4, 2023 10:55 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] level of distrust/animosity of PR reason for removal
Importance: High

Hello -

I feel like someone once shared that bad blood is a reason for removal of PR - if I am remember right, I am hoping someone can share that case with me.

Diane J. Kiepe
Douglas Eden, P.S.
717 W. Sprague Ave., Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

KINDLY ALLOW 2-4 WORKING DAYS TO RECEIVE A RESPONSE TO NON-URGENT EMAILS.  FEEL FREE TO SEND YOUR EMAIL (OR RESEND YOUR EMAIL AS THE CASE MAY BE) MARKED URGENT IN THE SUBJECT LINE.

DISCLAIMER: the preceding message and any attachments may contain confidential information protected by law, the attorney-client privilege or other privilege.  This communication is intended to be private and may not be recorded or copied without the consent of the author.  If you believe this message has been sent in error, REPLY to sender and then DELETE this message.  Thank you.

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