[WSBAPT] Question about allocating debts and administration expenses

[Chandra Lewnau]

I have a fairly tricky probate where Decedent owed many debts, including
several judgment liens against the home, IRS back taxes and penalties, and
credit card debt. Decedent also made several specific gifts in her will.
I'm trying to make sure the debts and expenses are allocated properly. I
have always assumed the abatement statute means that the residuary pays for
debts and expenses and only if there is insufficient residue do you move to
the next category of property. But this is the first time it would make a
difference in one of my probates.

One set of heirs (including the PR) gets the house. The PR sold the house
and the liens and mortgage were paid off from the proceeds.
Another set gets the "bank accounts, savings accounts, and retirement
accounts." However, the only retirement account had a beneficiary
designation that named 2 different beneficiaries (including the PR).
The PR gets the residue. This includes an investment account.

1) I believe the retirement account is off limits and not responsible for
paying any of the debts no matter what per RCW 6.15.010 ad 6.15.020.
2) I think the house heirs are stuck paying the mortgage and judgment liens
(not under the abatement statute, but because the will doesn't say the
house passes free of encumbrances and therefore it is subject to all
encumbrances)
3) I think the residue pays for the remaining debts and expenses of
administration.
4) I think this means the bank accounts are not charged with either the
debts or expenses of administration.

That said, I am wondering about the expenses of administration that were
solely attributable to the house or the efforts to sell the house. The PR
chose to sell the house and distribute the proceeds rather than deeding the
house to the heirs (including herself) at the end of the will contest and
creditor claim periods. The estate would not have had those additional
administration expenses if the house had been distributed earlier. On the
other hand, because the Decedent had not filed taxes for over 5 years, the
PR arguably didn't know if those debts might exceed the residue and require
payment from the house and other gifts. (Note my client, the PR, pays less
in expenses under this theory.)

Thanks for any advice you can offer.

-- 

*Chandra M. Lewnau*  *|*  Attorney

WALL GROUP LAW

51 W. Dayton St., Suite 305  *|*  Edmonds, WA 98020

*Tel* 425.670.1560  *|*  *Fax* 425.361.1512  *|* http://www.wallgrouplaw.com


THIS ACCOUNT IS FOR MAILING LIST PURPOSES ONLY.

For faster response email chandra at wallgrouplaw.com
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