T rust and E state D ispute R esolution A ct Law & Practice

1. Trust and Estate Dispute Resolution ActLaw & Practice TEDRA: Chapter 11.96A RCW

2. TEDRA Law & PracticeTom Moser Advocates Law Group www.advocateslg.com December 6, 2012

3. Introduction • Recent legislation • 5 key elements of TEDRA • The architecture of TEDRA • How to commence a TEDRA action • Petition & Summons • Answer & Counterclaims • Alternative Dispute Resolution • Mediation • Arbitration • Initial Hearing • Statute of limitations • Special representative • Cy Près • Practice tips • More . . .

4. Legislative Amendments • TEDRA was amended by SHB 1051 in the 2011 legislature with revisions that became effective January 2012: • Trust situs • Venue for proceedings • Notice by electronic transmission • Statute of limitations • Correction of mistakes in documents • Cy près doctrine

5. Architecture of TEDRA TEDRA has 5 key elements

6. Architecture of TEDRA

7. Look first to Purpose of the Act

8. The Statute Purpose 2x The overall purpose of this chapter is . . . for the resolution of disputes and other matters involving trusts and estates . . . The provisions are intended to provide nonjudicial methods for the resolution of matters, such as mediation, arbitration, and agreement. This chapter also provides for judicial resolution of disputes if other methods are unsuccessful. RCW 11.96A.010

9. The Statute Purpose It is intended that the adoption of [the Act] will encourage and direct all parties in trust, estate, and nonprobate matter disputes, and the court system, to provide for expeditious, complete, and final decisions to be made in disputed trust, estate, and nonprobatematters. RCW11.96A.260 Matter is defined in RCW 11.96A.030

10. TEDRA gives Power to courts

11. Plenary Power of Courts (1) It is the intent of the legislature that the courts shall have full and ample power and authority under this title to administer and settle: (a) . . . estates . . . incapacitated, missing, and deceased persons, including matters involving nonprobate assets and powers of attorney . . .; and (b) All trusts and trust matters. RCW 11.96A.020

12. Plenary Power of Courts (2) If this title should . . . be inapplicable . . . to . . . the matters listed in subsection (1) . . . the court nevertheless has full power and authority to proceed . . . all to the end that the matters be expeditiously administered and settled by the court. RCW 11.96A.020

13. Plenary Power of Courts “The Act's grant of plenary powers to the trial court lends additional support to the trial court's authority to appoint [the] trustee. The legislature provided that it intended courts to have ‘full and ample power and authority’ to administer and settle all trusts and trust matters under the Act.”In re Irrevocable Trust of McKean, 144 Wash. App. 333, 343, 183 P.3d 317, 322 (2008)

14. Power of Courts Practice Tip • When considering power of the court to act in a TEDRA consider the court rules. TEDRA is a “special proceeding”

15. Court Rules & TEDRA • CR 1 states that generally the civil rules “govern the procedure in the superior court . . . with the exceptions stated in rule 81.” • CR 81 states that rules are not applicable “where inconsistent with rules or statutes applicable to special proceedings.” The point is . . .

16. Special Proceeding • A judicial proceeding under TEDRA is a special proceeding under the civil rules. RCW 11.96A.090(1). • Therefore, Superior Court Civil Rules and other procedural rules of court apply to judicial proceedings under TEDRA only to the extent that they are consistent with chapter 11.96A RCW,

17. Jurisdiction & Venue

18. Jurisdiction (1) The superior court . . . has original subject matter jurisdiction over the probate of wills and the administration of estates . . . in all instances, including without limitation: (a) When a resident of the state dies; (b) When a nonresident of the state dies in the state; or (c) When a nonresident of the state dies outside the state. RCW 11.96A.040

19. Jurisdiction & Venue (4) The subject matter jurisdiction of the superior court applies without regard to venue. A proceeding or action by or before a superior court is not defective or invalid because of the selected venue if the court has jurisdiction of the subject matter of the action. RCW 11.96A.040(4)

20. Venue Priority Venue for a probate may be in any county. In case of a challenge, priority is given first to the county of the Decedent's residence, then to any county in which part of the probate assets or the nonprobate assets might be located, and finally to the county in which the Decedent died. 26B Wash. Prac., Probate Law and Practice § 3.12 (citing RCW 11.96A.050 & .060)

21. In Personamor In Rem Jurisdiction Probate proceedings are in rem: “ ‘It has been uniformly ruled . . . that proceedings to probate or to set aside the probate of wills are proceedings in remand not in personam; that such proceedings are exclusively to determine the status of the res, and not the rights of the parties.’ In re Estate of Black, 116 Wash. App. 492, 499, 66 P.3d 678, 682 (2003)

22. In Personamor In Rem Jurisdiction • The service of the petition and summons gives the court in personamjurisdiction over the parties. • The service provides notice which implicates the due process rights of a party. • Be aware of likely distinction between RCW 11.96A.100 and .110. • Notice by mail and electronic transmission. Practice Tip

23. In Personamor In Rem Jurisdiction • RCW 11.96A.110 was amended to allow notice by electronic transmission. The issue is whether notice in §.110 is the same as in §.100: • Notice of judicial proceedings in §.110 may be by mail or electronic transmission; • Notice by summons in §.100 seems to require personal service.

24. Definition of Matters

25. Matters: RCW 11.96A.030(2) • "Matter" includes any issue, question, or dispute involving: (a) The determination of . . . (b) The direction of . . . (c) The determination of . . . (d) The grant to . . . (e) An action or proceeding . . . (f) The amendment, reformation, or conformation of . . . The list of “matters” is extensive

26. Other “Matters” Within TEDRA • a. Personal Representative Unfit to Serve (RCW 11.36.010) • b. Revocation of Letters (RCW 11.28.250 and RCW 11.68.070) • c. Common Law Breach of Fiduciary Claims • d. Will Contests (RCW 11.24.010) • e. Breach of an Oral Contract to Devise • f. Omitted Spouse (RCW 11.12.095) • g. Omitted Child (RCW 11.12.091) 26B Wash. Prac., Probate Law and Practice § 2.33 More

27. Other “Matters” Within TEDRA • h. Creditor Claims (RCW 11.40.080) • i. Breach of the Instrument • j. Negligence • k. Conversion • l. Unjust Enrichment • m. Inventory and Appraisement (RCW 11.44.015) • n. Tortious Interference with the Right to Inheritance 26B Wash. Prac., Probate Law and Practice § 2.33

28. Definition of Party in TEDRA

29. Party: RCW 11.96A.030(5) "Party" or "parties" means each of the following persons who has an interest in the subject of the particular proceeding and whose name and address are known to, or are reasonably ascertainable by, the petitioner:(a) The trustor if living;(b) The trustee;(c) The personal representative;(d) An heir;

30. Party: RCW 11.96A.030(5) (e) A beneficiary, including devisees, legatees, and trust beneficiaries;(f) The surviving spouse or surviving domestic partner of a decedent with respect to his or her interest in the decedent's property;(g) A guardian ad litem;(h) A creditor;(i) Any other person who has an interest in the subject of the particular proceeding;(j) The attorney general if required . . .

31. Party: RCW 11.96A.030(5) (k) Any duly appointed and acting legal representative of a party . . . ;(l) Where applicable, the virtual representative of any person described in this subsection . . . ;(m) Any notice agent, resident agent, or a qualified person, . . . ; and(n) The owner or the personal representative of the estate of the deceased owner of the nonprobate asset that is the subject of the particular proceeding, . . . .

32. Commencing a TEDRA Action • Where do I start? • How is an action commenced? • If there is already a probate pending, do I file a new case or in the probate?

33. Petition & Summons Unless rules of court require or this title provides otherwise, or unless a court orders otherwise: (1) A judicial proceeding under RCW 11.96A.090 is to be commenced by filing a petition with the court; RCW 11.96A.100 And to this word! We need to come back to this statute

34. Petition & Summons (2) A summons must be served in accordance with this chapter and, where not inconsistent with these rules, the procedural rules of court, however, . . . RCW 11.96A.100 We will read the rest of this section carefully

35. Petition & Summons (2) . . . if the proceeding is commenced as an action incidental to an existing judicial proceeding relating to the same trust or estate or nonprobate asset, notice must be provided by summons only with respect to those parties who were not already parties to the existing judicial proceedings; RCW 11.96A.100 Now go back to RCW 11.96A.090

36. Where Do I Start? (2) A judicial proceeding under this title may be commenced as a new action or as an action incidental to an existing judicial proceeding relating to the same trust or estate or nonprobate asset. RCW 11.96A.090 A TEDRA action may be filed in an existing probate or trust litigation.

37. Where Do I Start? (3) Once commenced, the action may be consolidated with an existing proceeding or converted to a separate action upon the motion of a party for good cause shown, or by the court on its own motion. RCW 11.96A.090 Let the judge figure out whether to consolidate or separate the action.

38. The Petition • Filing within the probate: Petitioner is an heir and the PR is respondent.

39. The Petition • Filing as an original action: The Estate is petitioner & respondent was an heirs who was holding assets of the Estate.

40. The Petition • Filing as trust litigation: The Trust & a co-trustee are petitioners & the other co-trustees are respondents

41. Invoking Jurisdiction • A petition may be filed to commence an action, but is not required to invoke the court’s jurisdiction. See In re Estate of Dubois, unpublished decision, Division III. • Widow with nonintervention powers filed and served a declaration of completion of probate; • Sons of deceased filed notice of mediation within 30 days, but no petition; • PR ignored the notice, closed the estate and made distribution to the sons.

42. Invoking Jurisdiction • Sons moved to reopen the probate; • PR responded that sons failed to follow RCW 11.68.110(2) requiring a petition to be filed to challenge automatic closure; • Trial court agreed and denied the motion; • Sons appeal and Court of Appeals reversed, holding that notice of mediation was sufficient under TEDRA; Reversed

43. Invoking Jurisdiction • “A ‘judicial proceeding’ under TEDRA ‘may be commenced as a new action or as an action incidental to an existing judicial proceeding relating to the same trust or estate or nonprobate asset.’ RCW 11.96A.090(2). The sons here commenced their mediation action incidental to the probate. No petition was needed.”In re Estate of Dubois, 146 Wash. App. 1052 (2008) Notice:This is an unreported case

44. Summons • (3) The summons need only contain the following language or substantially similar language: RCW 11.96A.100(3) The text of the statute is not the same text as a normal summons.

45. Summons Practice Tip Don’t let your otherwise competent legal assistant draft the summons from your CR 4Summons form! RCW 11.96A.100(3)

46. Answer to Petition & Counterclaims • Answer and any counterclaim must be filed at least 5 days before the initial hearing; • Replies to counterclaim must be filed at least 2 days before the hearing; • Since notice of an initial hearing requires only 20 days, things may move quickly!

47. Answer to Petition & Counterclaims • Answer must include all defenses, including challenge to subject matter jurisdiction. • In re Estate of Palmer involved a TEDRA petition filed to challenge actions taken by respondent when she was attorney-in-fact for the decedent. • Respondent’s Answer did not raise defenses that she later raised on last day of trial.

48. Answer to Petition & Counterclaims • Trial court denied motions to dismiss that were untimely and Court of Appeals affirmed:“We hold that [respondent] waived the time bar defense in RCW 11.11.070(3) by failing to plead it in her answer or in a CR 12 motion.”In re Estate of Palmer, 145 Wash. App. 249, 258-59, 187 P.3d 758, 763 (2008)

49. Mediation • A party may serve a “Notice of Mediation” and give notice of a hearing to set mediation. RCW 11.96A.300 • The Notice may include a list of proposed mediators. • The Notice must state the nature of the matters to be mediated. • Parties must object to mediation within 20 days of the scheduled hearing.

50. Mediation • If the court orders mediation the order is not subject to appeal or revision. • If the court denies the request for mediation, the court may: • Decide the issues outlined in the Notice or Petition; or • Set the matter for arbitration; or • Directing other judicial proceedings.