Tag Archives: Probate Law

Caselaw Update: Court Addresses Undue Influence in Estate of Melter

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Estate of Melter, 167 Wn. App. 285, 273 P.3d 991 (2012) is an interesting case, well authored by both the majority, and the separate concurrence.  It’s a must read for Washington trust and estate lawyers.  We think it is important because it addresses one beneficiary’s confidential relationship with the decedent and how that can affect his (or his opponent’s) burden of production and proof in a will contest where undue influence is alleged.

The case is also important in that it emphasizes testamentary capacity as an important factor in distinguishing mere influence, which is nugatory, from undue influence, which is consequential.  Here are the basic facts: Continue reading →

Federal Judge Strikes Down Portion of DOMA in Estate Tax Case

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Yesterday a federal judge ruled that a critical section of the Defense of Marriage Act (DOMA) unconstitutionally discriminates against married same-sex couples. Here’s the opinion.  And here’s the story:

Edie Windsor and Thea Spyer lived as a couple in New York City for 44 years. They were engaged in 1967, a couple of years after becoming a couple, and married in Canada in May, 2007. Thea died two years later.

The IRS did not recognize the marriage and taxed Edie’s inheritance from Thea (which would not happen if they were husband and wife). Ordinarily, whether a couple is “married” for federal tax purposes depends on  whether they are married in the state they reside. The State of New York recognized Edie and Thea’s marriage, but under DOMA, the federal government refuses to treat married same-sex couples the same way as other married couples.

Edie sued under the Equal Protection Clause of the Fifth Amendment to the Constitution… And won, at least at the trial court level.

Section 3 of DOMA codifies the non-recognition of same-sex marriage for all federal purposes, including insurance benefits for government employees, Social Security survivors’ benefits, and the filing of joint tax returns.

Edie argued that Section 3 denied her equal protection, because she was gay, married to a woman, but not allowed the same tax treatment she would have if she were married to a man.

The court declined Edie’s invitation to make gays and lesbians a “suspect class” which would have required the court to strike down the law absent compelling circumstances justifying it, which rarely present.  Instead, the court gave it the lowest level of review is “rational review,” which means that if a rational basis for the law is conceivable, the law will be sustained as constitutional, even if it applies unequally.

Under the lowest standard of review, the court still held DOMA’s Section 3 violates the Fifth Amendment’s Equal Protection Clause.

Inheritance Disclaimer Conundrum

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This question was presented on Oregon Bar Association’s probate/estate listserv.  We thought it deserved some attention.  Here’s the question:

Listmates:

I represent wife of deceased husband. Wife and husband had numerous joint accounts. The accounts were all joint accounts (right of survivorship). The total assets are in the approximate amount of two million dollars. Wife wants to disclaim the sum of one million dollars in order to use deceased husband’s one million dollar Oregon exemption. I recently learned that wife placed the joint accounts solely in her name shortly after husbands death. Other than placing the accounts solely in her name I do not believe that she has taken any other activity as to the accounts. We are still well within nine months from date of death.

Here are the thoughtful (unattributed) responses :

1. Too late. She accepted the survivorship interest by exercising dominion and control over the accounts when she transferred the funds.  Great example of why disclaimer trust planning is very risky and should be avoided whenever feasible.

2. Right on, …. Does Oregon have a counterpart to the Washington Trust and Estate Dispute Resolution Act (TEDRA) RCW 11.96A? We use this to create a court order to overcome many errors, like make irrevocable trusts revocable, defog ambiguities, etc….quite remarkable, in fact….both a judicial and non-judicial (stipulation) methods….please advise, not that I would use one in Oregon due to the garlic wreath I have around my neck when it comes to court… Continue reading →

Were the Powells’ Life Insurance Policies Community Property?

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So we’ve received questions on this, so how about some answers.

First, in Washington, a policy purchased wholly with community property funds is community property.  Occidental Life Ins. Co. v. Powers, 192 Wash. 475, 74 P.2d 27 (1937).

Second, the time of acquisition of the policies matters in determining whether it is community property.  In Washington State, courts apply an apportionment theory in determining the time of acquisition.  Other community property law jurisdictions hold that the ownership of a life insurance policy is determined by reference to the time when the policy was purchased.  So the Powells and Coxes will be looking to when the policies were purchased, and where the Powells lived at that time.

Without knowing the facts (which is what a trial is for), we think it likely these policies were purchased during the Powells’ marriage, and are thus community property under both Utah and Washington law.

One interesting question will be how Josh’s continued payment of premiums after Susan went missing will be treated.  If she is presumed deceased at the time she went missing, then it is arguable that a portion of the proceeds are Josh’s separate property.  See e.g., W. DeFuniak & M. Vaughn, PRINCIPLES OF COMMUNITY PROPERTY 64, 79 (2d ed. 1971).

Josh Powell’s Siblings May Claim Life Insurance Proceeds

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It is being reported that Josh Powell’s siblings have claimed life insurance proceeds – $1 million on Josh’s life, $500,000 on his kids’ lives, and $1 million on Susan’s life.  Here’s a link to the story on Yahoo.

This is not quite accurate.  The insurance company, New York Life, alleges that the Powell siblings inquired about how to make a claim, but it is not alleged that they actually claimed any proceeds, at least not yet.  It is also alleged – and here is the crux of the issue – that the siblings’ claims, if any, compete with Susan Powell’s heirs’ claims and the issues are sufficiently complex that New York Life prefers handing the money to the court, and letting it decide, rather than risk making a wrong decision and ending up liable to somebody for deciding wrong.

The question of who will receive the policy proceeds is complicated.  Washington State is a community property state, and thus Susan’s estate may have a community property interest in the policy on Josh’s life.  (Utah law may also apply.)  Further complicating things is that technically, Susan Powell remains a missing person; it has not been adjudged that she is deceased.  She is named in the lawsuit as, Susan Powell an absentee person; or her successors in trust, as Trustee of the Joshua S. Powell and Susan M. Powell Revocable Trust.

Josh’s estate may be disinherited from receiving anything from Susan’s death under Washington’s “Slayer Statute,” RCW 11.84.020.  But here, it is not Josh who is claiming the proceeds, but his siblings.

In any event, New York Life is faced with difficult questions about who is entitled to the proceeds.  So it is suing both Susan’s heirs and Josh’s heirs for a determination of who gets the funds.  Here’s the complaint.  So far, only Susan’s heirs – her parents – have appeared in the lawsuit.  They are represented by attorney Anne Bremner of the Stafford Frey Cooper firm.

We hope this sad story can be resolved quickly.

King County Probate Gone Wild!

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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.