We’re back…

We took a two year hiatus, and the best we can do is this?

Oh well, here goes.

We recommend everyone who writes a lot read this awesome book. It’s called Point Made: How to Write Like the Nation’s Top Advocates. It dissects the writing from top US Supreme Court advocates, and gives real world examples you can use in your own writing. Here’s the cover:

Or <<Click here>>

My favorite part was the author’s imprimatur upon sentences beginning with “and” or “but.” These can be “crisp” sentences, he says. We agree.

The other takeaway is that MSWord spell check can also count percentage of passive sentences, and even “score” your writing for readability.

Even if you’re not a lawyer, it gives you an insight into the power of words and structure. If you think these attorneys are not spinning as much as Fox News, think again.

Is a Sales Tax Really Regressive?

Washington  is one of the few states that does not have an income tax. Instead, it has a hefty sales tax. Every few years politicians dust  off the old state income tax playbook and try to sell it to voters as an  alternative to the sales tax.

The  last time this happened was 2010, when we voted on I-1098, which was a  voter initiative to lower real property taxes, eliminate the B&O tax  (a tax that businesses pay), and impose a state income tax. Voters resoundingly rejected it.

Proponents  of I-1098 argued (among other things) that the sales tax is  “regressive,” meaning that it hurts poor people more than rich people.  But when measuring who is poor and who is rich across an entire  population – in order to argue whether a tax is fair – it gets complicated  quickly. Continue reading

King County Probate Gone Wild!

When a court opinion begins, “…. what should have been a simple estate and trust matter became protracted and contentious,” you know you’re in touble.

The Court of Appeals recently published Estates of Foster, 165 Wn. App. 33 (2011).  In this case the Executor and his brother teamed up to distribute from their parents’ estates disproportionately to themselves rather than to the parents’ grandchildren trust beneficiaries as set forth in the parents’ trust documents.

The case is significant for a couple reasons.  First, the court confirms that the Executor was not entitled to a jury trial because, while his fiduciary breach was the gravamen of the case, it was still a probate/trust matter, and restoration of the stolen funds, as opposed to general damages were sought.  The former types of cases don’t get juries; the latter do.

The case is also significant becuase of how the court treats the statute of limitations.  The grandchildren brought their claim more than three-years after the alleged breach.  The statute of limitations for fiduciary breach claims is three-years.  The court allowed the claim, applying the “discovery rule” without much analysis other than finding that the breach could not have been discovered earlier because of the Executor’s failure to cooperate when the grandchildrens’ early information requests.

Probate: What if the Real Estate is Worth Less than the Mortgage?

These days, estates are often walking away from real property rather than paying the mortage.  They do this because lenders usually foreclose on real property nonjudically.  No deficiency is allowed to a lender after a nonjudicial foreclosure.  See RCW 61.24.100.  (On a semi-related note, this can leave “forgiveness of debt,” which is taxed as income to the estate).  In other words, the estate walks away from the property and the debt.  This is a great outcome for the estate, but not a guaranteed outcome because a savvy lender can file a creditor’s claim and simply enforce its rights under the promissory note (that is, assuming the lender knows about the estate – notice anyone?).

Here are the rules: There are known (or “reasonably ascertainable”) creditors and unknown creditors.  RCW 11.40.040.  A mortgage lender is most certainly a “known” creditor.  If an Executor fails to notify a known creditor – the creditor will have 2 years from the date of death to sue the decedent’s estate (or rather, the Executor/Personal Representative).  See RCW 11.40.051(1)(c).  If you notify a known creditor, he has the later of four months or thirty days from when notice was published.  (If the notice to creditors is published, unknown creditors have four months.)

So, a PR can: 1. pay the debt; or 2. not pay the debt; and A. send notice to the lender; or B. not send notice to the lender.  If notice is sent, the statute of limitations for a creditor’s claim is the later of four months from publication or thirty days from sending the notice. RCW 11.40.051.  If not, it is two years.

If the PR stops paying, the lender will issue a notice of default, and eventually start a foreclosure (it could take months, even a year or more depending on the lender).  If the lender is on the ball (or if you send notice to the lender and he reads it and responds), he will likely file a creditor’s claim.  Since lenders have the option of suing on the note or foreclosing, the savvy lender will rest on his creditor’s claim rather than foreclose, knowing he can get paid in full that way.

The conclusion is this:  If you’re the lender and your borrower stops paying, search the Washington Courts Case Name Search index to see if there’s an open estate.  If so, file a creditor’s claim.  If you’re the Executor/Personal Representative, stop paying the mortgage, and see what happens.

The Enumclaw Project has begun!

FLGWelcome to the Enumclaw Project.  This is your destination for everything new in Wills | Trusts | Estates.  You might wonder, why the “Enumclaw Project?”  And “what does that have to do with estate planning?”  Well, nothing, except this:  TEP is maintained by Farr Law Group, that law firm in Enumclaw on your way to Crystal Mountain and Mt. Rainier.  Our practice focuses exclusively on estate planning and probates.  Subscribe, check back, drop us a line or even stop by.