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<p class="MsoNormal">Hi Jane—I agree, but I also have been waiting for the right opportunity to try to block a community creditor who doesn't get paid when the first spouse dies. I think there is authority for that position, so long as the community debt doesn't
fall under the family support expense statute, <a href="https://app.leg.wa.gov/RCW/default.aspx?cite=26.16.205">
RCW 26.16.205</a>.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">From briefing I used in a case years ago but never got a ruling on:<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">The death of a spouse terminates the marital relationship and the "marital community."
<u>Bank of Montreal v. Buchanan</u>, 32 Wn. 480, 73 P. 482 (1903); <u>see also</u>
<u>Washington State Bar Assn. Community Property Deskbook</u> (4th ed. 2014) (hereinafter "CP Deskbook"), Sec. 4.11. At death of the first spouse, the community "ceases to exist."
<u>Sutton v. Hirvonen</u>, 113 Wn.2d 1, 6, 775 P.2d 448 (1989). The first deceased spouse's Estate accordingly has jurisdiction over all community property and community liability, not just the decedent's half, in order to dispose of all community matters.
<u>Ruth v. Dight</u>, 75 Wn.2d 660, 670, 453 P.2d 631 (1969) (claim against the community cannot be pursued against surviving spouse if not also properly brought against the deceased spouse's estate);
<u>Gilliam v. City of Centralia</u>, 14 Wn.2d 523, 531, 128 P.2d 661 (1942) (deceased spouse's Personal Representative, not the surviving spouse, has authority to pursue a community claim);
<u>Magee v. Big Bend Land Co.</u>, 51 Wash. 406, 408, 99 P. 16 (1909) (administration of first spouse's estate had jurisdiction and authority to sell the entire community real property).
<u>See also</u> <u>CP Deskbook</u>, Sec. 4.13. Here, Husband's Estate, being the Estate of the first to die, governed all community property and community liability. Wife, as the surviving spouse, cannot be sued for a community liability; the debt must be resolved
as part of Husband's Estate. <u>Ruth</u>. The claimant's failure to timely file a creditor claim in Husband's Estate bars collection of the debt, and the surviving spouse cannot be sued for this community liability.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">RCW 26.16.205 has been interpreted to create, for family expenses, not just community liability but separate liability as to each spouse, so the above case law would not protect the surviving spouse.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">Sincerely,<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Eric<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Eric C. Nelsen<o:p></o:p></p>
<p class="MsoNormal">Sayre Law Offices, PLLC<o:p></o:p></p>
<p class="MsoNormal">1417 31st Ave South<o:p></o:p></p>
<p class="MsoNormal">Seattle WA 98144-3909<o:p></o:p></p>
<p class="MsoNormal">206-625-0092<o:p></o:p></p>
<p class="MsoNormal">eric@sayrelawoffices.com<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Jane Bitz<br>
<b>Sent:</b> Thursday, March 5, 2020 3:51 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt">Yes. That is just what I was going to say Eric. This can be a stand-alone proceeding which would be appropriate if the surviving spouse received all the property of the marriage through a Community Property
Agreement. The main factor for asking that the award be increased to include all of the equity in the residence is that it is the surviving spouse’s home and could not be replaced in the current market if she was forced to sell out to pay the creditors.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt">Also I would worry about advising a client to just wait out the 2 year period for claims against a decedent because the creditor could always argue that the husband’s debts were for the benefit of the community
and therefore the responsibility of the surviving spouse, even though the debt was only in the name of the deceased spouse alone.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt">My 2 cents.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt">Jane Bitz.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt"> </span><o:p></o:p></p>
<div>
<p class="MsoNormal">Jane G. Bitz<o:p></o:p></p>
<p class="MsoNormal">Of Counsel<o:p></o:p></p>
<p class="MsoNormal">Wolff, Hislop & Crockett, PLLC<o:p></o:p></p>
<p class="MsoNormal">12209 E. Mission Ave, Suite 5<o:p></o:p></p>
<p class="MsoNormal">Spokane Vallley, WA 99206-4824<o:p></o:p></p>
<p class="MsoNormal">(509) 927-9700 x126<o:p></o:p></p>
<p class="MsoNormal">FAX: (509) 777-1800<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><img border="0" width="191" height="96" style="width:1.9895in;height:1.0in" id="Picture_x0020_1" src="cid:image001.jpg@01D5F307.C73445B0" alt="image001 (4)"></span><span style="color:black"><img border="0" width="115" height="100" style="width:1.1979in;height:1.0416in" id="Picture_x0020_2" src="cid:image002.png@01D5F307.C73445B0"><img border="0" width="273" height="96" style="width:2.8437in;height:1.0in" id="Picture_x0020_3" src="cid:image003.jpg@01D5F307.C73445B0"></span><o:p></o:p></p>
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<p class="MsoNormal"><span style="font-size:14.0pt"> </span><o:p></o:p></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Eric Nelsen<br>
<b>Sent:</b> Thursday, March 5, 2020 3:32 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Sounds pretty good. This may not change your analysis, but FYI a family support award can be made even if no probate is ever opened. See
<a href="https://app.leg.wa.gov/RCW/default.aspx?cite=11.54&full=true#11.54.010">
RCW 11.54.010(3)</a>. So you can get the protection without having to complete the whole probate process; obviously there's still a filing fee to pay but the court's order would be limited to the family support award.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<p class="MsoNormal">Sincerely,<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Eric<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Eric C. Nelsen<o:p></o:p></p>
<p class="MsoNormal">Sayre Law Offices, PLLC<o:p></o:p></p>
<p class="MsoNormal">1417 31st Ave South<o:p></o:p></p>
<p class="MsoNormal">Seattle WA 98144-3909<o:p></o:p></p>
<p class="MsoNormal">206-625-0092<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:eric@sayrelawoffices.com">eric@sayrelawoffices.com</a><o:p></o:p></p>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Susan Donahue<br>
<b>Sent:</b> Thursday, March 5, 2020 3:19 PM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv' <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Thank you, Eric. I appreciate all the citations and thought involved here. But considering that all the property was community property and the CPA transferred it to the surviving spouse, I think we’ll just let the 2 years run on the
debts and not open a probate. If there wasn’t a CPA, it would be a different story. I’ll save your response for all the great citations and thinking. Also, the surviving spouse has enough to live on so she doesn’t need a family support award. She has
considerable life insurance coming, social security and her husband’s retirement money coming to her to give her enough to live on, so she won’t need a family support award which would involve opening an probate and having the PR become responsible for the
debts.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Thanks again.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan Donahue<o:p></o:p></p>
<p class="MsoNormal">Law Office of Susan Donahue<o:p></o:p></p>
<p class="MsoNormal">125 West 2<sup>nd</sup> Avenue, Suite “B”<o:p></o:p></p>
<p class="MsoNormal">P.O. Box 81<o:p></o:p></p>
<p class="MsoNormal">Twisp, WA 98856<o:p></o:p></p>
<p class="MsoNormal">(509) 996-5944 (phone)<o:p></o:p></p>
<p class="MsoNormal">(509) 362-9692 (fax)<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:sdonahue@sdonahuelaw.com">sdonahue@sdonahuelaw.com</a><o:p></o:p></p>
<p class="MsoNormal"><a href="http://www.sdonahuelaw.com">www.sdonahuelaw.com</a><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
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<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Eric Nelsen<br>
<b>Sent:</b> Thursday, March 05, 2020 1:55 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Dalynne's recommendation of a family support award is a good one, I think, if the house's equity is less than about $220,000. See
<a href="https://app.leg.wa.gov/RCW/default.aspx?cite=11.54&full=true">Ch. 11.54 RCW</a>. That can shield $125,000 from creditors, so if the house equity is above that you'd still have to pay creditors some amount. If the equity is $220,000 or more, then family
support won't really prevent the creditors from trying to force sale.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Consider also the nature of the debt—is there any argument that it's all separate debt that wasn't for the benefit of the marital community? If so, there might be a basis to assert that the creditors can't attach his community property
interest in the house. Key case is <u>Nichols Hills Bank v. McCool</u>, which specifically states that for contractual (as opposed to tort) obligations, if the contract was a separate obligation of the spouse, the creditor cannot reach the community property.
<span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">
</span><a name="hit_last"><i><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:yellow">Nichols</span></i></a><span style="mso-bookmark:hit_last"></span><i><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> Hills
Bank v. McCool</span></i><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=104+Wn.2d+78&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">104
Wn.2d 78</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=701+P.2d+1114&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">701
P.2d 1114</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> (1985).</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> </span><o:p></o:p></p>
<p class="MsoNormal">From WSBA Community Property Deskbook:<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="bodytext1" style="margin-right:3.75pt;text-indent:15.0pt;background:white">
<span style="font-size:13.5pt;font-family:"Times New Roman-Roman",serif;color:black">Most nontort obligations incurred during marriage are incurred voluntarily, but this is not always true. Medical expenses and residential placements, for example, may frequently
be involuntary. In <i>Dean v. Lehman</i>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=143+Wn.2d+12&fn=Washington%20Community%20Property%20Deskbook" target="_new">143 Wn.2d 12</a>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=18+P.3d+523&fn=Washington%20Community%20Property%20Deskbook" target="_new">18
P.3d 523</a> (2001), the court held that the costs of incarcerating a prison inmate create community liability. <i>Id. </i>at 30-31. The same would be true of tax liabilities, which are rarely voluntary. <i>Reid v. United States</i>, 2001-1 U.S. Tax Cas. (CCH)
¶50,250, 87 A.F.T.R.2d (RIA) 1042 (W.D. Wash. 2001). In general, the family expense statute, RCW <a href="http://links.casemakerlegal.com/states/WA/books/Revised_Code/browse?ci=14&codesec=26.16.205&title=26&fn=Washington%20Community%20Property%20Deskbook" target="_new">26.16.205</a>,
imposes community liability and separate liability on both spouses for “expenses of the family and the education of the children, including stepchildren.”</span><o:p></o:p></p>
<p class="bodytext1" style="margin-right:3.75pt;text-indent:15.0pt;background:white;font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;text-decoration-color: initial;word-spacing:0px">
<span style="font-size:13.5pt;font-family:"Times New Roman-Roman",serif;color:black">The act of a spouse managing community property is presumed to be for community benefit, and so one spouse’s knowledge may commence the running of the statute of limitations
on a community claim. In <i>Huling v. Vaux</i>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=18+Wn.App.+222&fn=Washington%20Community%20Property%20Deskbook" target="_new">18 Wn.App. 222</a>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=566+P.2d+1271&fn=Washington%20Community%20Property%20Deskbook" target="_new">566
P.2d 1271</a> (1977), the court held that the statute began to run at the time at which the wife became aware of the true boundaries of community real property purchased in her name alone. The husband could not accept the benefit of his wife’s purchase while
repudiating her knowledge of the transaction. Similarly, one spouse acting alone may toll the statute of limitations on a claim against the community if the act is done for a community benefit. Again, the community benefit is presumed. <i>Catlin v. Mills</i>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=140+Wash.+1&fn=Washington%20Community%20Property%20Deskbook" target="_new">140
Wash. 1</a>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=247+P.+1013&fn=Washington%20Community%20Property%20Deskbook" target="_new">247 P. 1013</a> (1926). But that presumption can be rebutted. <i>Gannon
v. Robinson</i>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=59+Wn.2d+906&fn=Washington%20Community%20Property%20Deskbook" target="_new">59 Wn.2d 906</a>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=371+P.2d+274&fn=Washington%20Community%20Property%20Deskbook" target="_new">371
P.2d 274</a> (1962).</span><o:p></o:p></p>
<p class="bodytext1" style="margin-right:3.75pt;text-indent:15.0pt;background:white;font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;text-decoration-color: initial;word-spacing:0px">
<span style="font-size:13.5pt;font-family:"Times New Roman-Roman",serif;color:black">Whether running or tolling applies to all of the property of the nonacting spouse seems unclear. The courts have held under the family expense statute, RCW <a href="http://links.casemakerlegal.com/states/WA/books/Revised_Code/browse?ci=14&codesec=26.16.205&title=26&fn=Washington%20Community%20Property%20Deskbook" target="_new">26.16.205</a>,
which imposes a three-way liability upon the community and the separate property of each spouse, that an action by one of the spouses that would toll the statute does not continue separate liability of the nonacting spouse. <i>See Haddad v. Chapin</i>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=153+Wash.+163&fn=Washington%20Community%20Property%20Deskbook" target="_new">153
Wash. 163</a>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=279+P.+583&fn=Washington%20Community%20Property%20Deskbook" target="_new">279 P. 583</a> (1929). Whether the statute is tolled depends on the particular
facts. <i>See Burnham v. Burnham</i>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=18+Wn.+App.+1&fn=Washington%20Community%20Property%20Deskbook" target="_new">18 Wn. App. 1</a>, <a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=567+P.2d+242&fn=Washington%20Community%20Property%20Deskbook" target="_new">567
P.2d 242</a> (1977) (award to the wife, in a dissolution decree, of real property encumbered by a mortgage did not constitute a new promise to pay).</span><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">Generally, the separate debt of one spouse cannot be satisfied out of community property. <i>Schramm v. Steele</i>, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=97+Wash.+309&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">97
Wash. 309</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=166+P.+634&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">166
P. 634</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> (1917). Nor may a spouse’s interest in community property be reached. <i>Stockand v. Bartlett</i>, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=4+Wash.+730&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">4
Wash. 730</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=31+P.+24&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">31
P. 24</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> (1892). As noted in §6.3, above, the insulation of the debtor spouse’s half interest in community personal property has been narrowed for
tort creditors by <i>deElche v. Jacobsen</i>, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=95+Wn.2d+237&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">95
Wn.2d 237</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=622+P.2d+835&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">622
P.2d 835</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> (1980), and <i>Keene v. Edie</i>, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=131+Wn.2d+822&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">131
Wn.2d 822</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=935+P.2d+588&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">935
P.2d 588</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> (1997). The insulation continues to exist as to contract creditors. </span><i><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:yellow">Nichols</span></i><i><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> Hills
Bank v. McCool</span></i><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=104+Wn.2d+78&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">104
Wn.2d 78</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white">, </span><a href="http://links.casemakerlegal.com/states/WA/books/Case_Law/results?ci=14&search%5bCite%5d=701+P.2d+1114&fn=Washington%20Community%20Property%20Deskbook" target="_new"><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;background:white">701
P.2d 1114</span></a><span style="font-size:12.0pt;font-family:"Times New Roman-Roman",serif;color:black;background:white"> (1985).</span><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<p class="MsoNormal">Sincerely,<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Eric<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Eric C. Nelsen<o:p></o:p></p>
<p class="MsoNormal">Sayre Law Offices, PLLC<o:p></o:p></p>
<p class="MsoNormal">1417 31st Ave South<o:p></o:p></p>
<p class="MsoNormal">Seattle WA 98144-3909<o:p></o:p></p>
<p class="MsoNormal">206-625-0092<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:eric@sayrelawoffices.com">eric@sayrelawoffices.com</a><o:p></o:p></p>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Susan Donahue<br>
<b>Sent:</b> Thursday, March 5, 2020 1:13 PM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv' <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Thank you, Roger. There was a Community Property Agreement that left everything to the surviving spouse. There was no separate property for either of them. We are thinking of doing the probate as an insolvent estate and getting all
the creditors discharged after notice. I think that will work. The surviving spouse doesn’t need a family allowance, and there are no funds to give her one. She has social security and retirement funds from her deceased husband. I’m still wondering if
these retirement amounts, as non probate assets, would be available to the creditors. Also, I’m wondering if I need to set out all the probate and non-probate assets in the inventory since they all go to the surviving spouse by means of the CPA and so I can
just state that all the property was community property and it all passed to the surviving spouse via the CPA and then list all the debts which are about $95,000. I don’t think I have to list all the probate and non-probate assets if they have all gone to
the surviving spouse anyway. The CPA was recorded as was the decedent’s death certificate.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Still puzzling a little bit.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan Donahue<o:p></o:p></p>
<p class="MsoNormal">Law Office of Susan Donahue<o:p></o:p></p>
<p class="MsoNormal">125 West 2<sup>nd</sup> Avenue, Suite “B”<o:p></o:p></p>
<p class="MsoNormal">P.O. Box 81<o:p></o:p></p>
<p class="MsoNormal">Twisp, WA 98856<o:p></o:p></p>
<p class="MsoNormal">(509) 996-5944 (phone)<o:p></o:p></p>
<p class="MsoNormal">(509) 362-9692 (fax)<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:sdonahue@sdonahuelaw.com">sdonahue@sdonahuelaw.com</a><o:p></o:p></p>
<p class="MsoNormal"><a href="http://www.sdonahuelaw.com">www.sdonahuelaw.com</a><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Roger Hawkes<br>
<b>Sent:</b> Thursday, March 05, 2020 12:34 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan: at the very least you should negotiate with creditors; probability is that most of them would accept half rather than argue trying to get it all.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<p class="MsoNormal">Roger Hawkes, WSBA # 5173<o:p></o:p></p>
<p class="MsoNormal">Hawkes Law Firm and Sultan Lawyers<o:p></o:p></p>
<p class="MsoNormal">19944 Ballinger Way NE, Shoreline, WA 98155 and<o:p></o:p></p>
<p class="MsoNormal">423 Main, Sultan, WA 98294<o:p></o:p></p>
<p class="MsoNormal">206 367 5000<o:p></o:p></p>
<p class="MsoNormal">360 799 6438<o:p></o:p></p>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Susan Donahue<br>
<b>Sent:</b> Wednesday, March 4, 2020 12:10 PM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv' <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> [WSBAPT] insolvent estate<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">I have a situation where the decedent left a will with everything to his wife and also left a Community Property Agreement. The real property has been transferred to the wife with filing the death certificate at the county auditor’s office.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">My question is about what to do about the creditors. The decedent left about $95,000 in debt—unbeknownst to his family. There are no assets in the estate except for the real property. There are life insurance policies totaling about
$95,000. One option is to use the life insurance funds to pay the creditors and not go through probate at all since the real property has already been transferred via the CPA. This is okay with the wife. She has onset of dementia although still capable
of understanding and deciding what to do. Her daughter is helping her decide what to do. There is the concern that she will need Medicaid in the future to go into an assisted living home. They want to transfer the real property (house) to the daughter with
a quit claim deed so that it would be protected from Medicaid in the future. <o:p>
</o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">If we go through probate and declare insolvency, I understand that the creditors cannot access the life insurance money. BUT, in the probate process for an insolvent estate, can the creditors demand that the real property be sold to pay
them? I think that they can, but I want to get some confirmation about this. Could selling the real property to pay the creditors if we did the insolvent probate action be avoided if the wife quit claimed the real property to her daughter right now thus
making it unavailable to creditors in an insolvent probate action, or would that be viewed as an improper way to shield that asset? <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Finally, doing an insolvent probate action would cost a lot in attorney fees, maybe $10,000 or more because there are 22 creditors that would have to be contacted, etc. and then there would be the hearing to discharge them that they might
challenge and try to get the real property even though or even because it was quit claimed to the daughter immediately before filing the insolvent probate action.
<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">I’m wondering if there are any strategies or circumstances that I am not thinking about. The plan right now is to pay the creditors with the life insurance money and be done with it and not do a probate at all. That way, the house is
secured for the wife for sure and she can safely quit claim it to her daughter. (Although the 5-year look-back on Medicaid might capture the house unless the mother applies for Medicaid 5 years after quit claiming it to her daughter. But I’m not absolutely
certain about this, either.) The mother and the daughter don’t seem upset to lose the $95,000 in insurance money. In fact, they are in favor of this plan, but I want to be sure I am giving them the best option since so much money is involved.
<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Thank you.<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">Susan Donahue<o:p></o:p></p>
<p class="MsoNormal">Law Office of Susan Donahue<o:p></o:p></p>
<p class="MsoNormal">125 West 2<sup>nd</sup> Avenue, Suite “B”<o:p></o:p></p>
<p class="MsoNormal">P.O. Box 81<o:p></o:p></p>
<p class="MsoNormal">Twisp, WA 98856<o:p></o:p></p>
<p class="MsoNormal">(509) 996-5944 (phone)<o:p></o:p></p>
<p class="MsoNormal">(509) 362-9692 (fax)<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:sdonahue@sdonahuelaw.com">sdonahue@sdonahuelaw.com</a><o:p></o:p></p>
<p class="MsoNormal"><a href="http://www.sdonahuelaw.com">www.sdonahuelaw.com</a><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
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