FINAL BILL REPORT

HB 1504

                                   C 29 L 88

BYRepresentatives P. King, Padden and Meyers

Making technical corrections to trust and estate law.

House Committe on Judiciary

Senate Committee on Law & Justice

SYNOPSIS AS ENACTED

BACKGROUND:

Current law provides a variety of proceedings for finalizing the distribution of a deceased person's estate.  The procedures vary depending on a number of factors.  These factors include the size of the estate and whether there is a will that provides for the "testate" distribution of the estate, or no will, which means distribution will follow the inheritance rights provided by statute.

Any person claiming a right to inheritance from a decedent must file a later will or contest the adjudication of intestacy within four months of receiving notice of the entry of the order adjudicating testacy or intestacy and heirship.  After four months the order is deemed to be a final decree of distribution.  If the person files a petition for administration of the estate with or without a will more than four months after the entry of the order, the finality of the prior adjudications is not affected.

The estate of a decedent with assets of less than $10,000 may be handled without going through probate.  An affidavit must be completed by the person entitled to the decedent's property.  The affidavit must include a statement that the value of the decedent's entire estate does not exceed $10,000.  If the holder of some of the decedent's property receives notice that an inheritance tax report is requested by the inheritance tax division of the Department of Revenue, the holder of the property must retain the property until receiving a release from the inheritance tax division.  Because of changes in state tax laws inheritance tax is no longer owed on estates covered by the affidavit procedure.

The decedent's will may authorize the personal representative to probate the will without the intervention of the court.  There is some ambiguity as to whether provisions relating to court-supervised probate apply to non- intervention probate.

In a decree of distribution the court must direct that any distribution of $1,000 or less for the benefit of a minor be paid directly to the person named in the order of distribution without requiring a bond or the appointment of a guardian.  If there is a distribution to a minor not covered by the $1,000 provision, the money must be deposited in a bank account for the benefit of the minor, or property or money may be put under the control of a general guardian.  The Uniform Gifts to Minors Act authorizes the legal representative of an estate to transfer funds intended for a minor to an adult member of the minor's family, a guardian of the minor or a trust company as custodian.

The Trust Act of 1984 established a dispute resolution procedure to determine the rights and legal relations concerning any trust or estate.  Several other dispute resolution procedures were in existence when the Trust Act of 1984 was enacted.  There is some uncertainty as to whether the new procedures superseded the earlier procedures for resolving disputes.

The parties entitled to notice of judicial proceedings involving an estate may agree to have a dispute handled in a nonjudicial proceeding.  The agreement must be in writing and follow the statutorily prescribed form.  In the judicial proceeding the court may confer additional powers and duties on the personal representative or trustee.

The trustee of an estate may be sued based on contracts transferred to the trust, contracts made by the trustee, and for personal liability incurred by the trustee in the course of administration.  The trustee is entitled to the rights of exoneration and reimbursement for torts committed in the course of administering the trust.

A financial institution may pay funds on deposit in the name of the decedent to the personal representative of the estate.  The payment may not be made until at least 90 days have elapsed since the date of death and until the financial institution receives an inheritance tax release from the Department of Revenue.

An interest in real property created in favor of two or more persons is deemed to be an interest in common unless the interest in the property was acquired by a partnership, declared to be a joint tenancy or unless acquired as community property.

SUMMARY:

A person who has transferred property to a person entitled to the property under an order of testacy or intestacy and heirship that is deemed to be a final order is released from liability if letters testamentary or for administration are subsequently approved.

The affidavit procedure for handling an estate of $10,000 or less is made applicable to estates in which the value of the estate is not greater than the homestead.  The current homestead amount is $30,000.  No release from any state or local government is required in order to pay to the successor the assets of a decedent's estate subject to the affidavit procedure.

A statutory provision governing court-supervised probate applies to non- intervention probate only to the extent that the statute expressly provides.

The court may order property having a value of $5,000 or less, which is to be distributed to a minor, be distributed to the person named in the order of distribution.  Property may also be distributed pursuant to the Uniform Gifts to Minors Act.  Any property not distributed under these two provisions may be deposited with a financial institution or put under the control of a general guardian.

The dispute resolution procedure enacted as part of the Trust Act of 1984 does not supersede the other dispute resolution procedures found in the Probate Code.

Only the parties who have an interest in a dispute and who are entitled to notice of judicial proceedings involving an estate need to agree to a non- judicial dispute resolution process. The parties may agree to confer on the personal representative duties or powers not stated in the will or trust only if they determine that the powers are not inconsistent with the terms of the will or trust.

Before bringing a tort action against a trustee a person must attempt to collect from the trust property.

A financial institution may pay funds on deposit in the name of a decedent after 60 days have elapsed from the decedent's death.  If the personal representative provides an affidavit that the estate is not subject to the state estate tax a release from the Department of Revenue is not required.  A financial institution is discharged from liability if it transfers funds to the personal representative in accordance with the statutory provisions.

An interest in real property held in common by a husband and wife is presumed to be community property.

VOTES ON FINAL PASSAGE:

      House 97   0

      Senate    47     0

EFFECTIVE:June 9, 1988