In re Estate of McCuen

137 Wash.App. 1017 (2007) | Cited 0 times | Court of Appeals of Washington | February 20, 2007


Genevieve McCuen's will had a "pour-over" provision that placed most of her assets into a trust. Janet Kirchan is an heir to McCuen's estate and a beneficiary of the McCuen trust. After the personal representative closed the estate, the trustee petitioned to distribute the trust assets. In her objection to the petition for distribution of the trust, Kirchan challenged the trustee and the attorney fees, and also raised issues related to the closed estate. The trial court approved the fees relating to the trust and concluded that estate issues were not properly raised. We affirm, because the fees were reasonable as demonstrated by the record, and because the estate was already closed and final when Kirchan first lodged her objections.

Genevieve McCuen died in 1998, and her will was probated. Her personal representative was her son and heir, Tom McCuen. The only other heir was the appellant, Janet Kirchan. The will provided that the residue of her estate should be transferred into a trust, with Tom McCuen as trustee. The estate consisted mostly of real property.

Tom McCuen mishandled the estate and trust. After three years, Kirchan moved to replace McCuen as personal representative, and a trial was held. Just before the trial ended, the presiding judge died. He was replaced, and the action had to be retried. McCuen was removed in 2001 and replaced by Fred Schoen, a court-appointed professional personal representative and trustee. But a hostile relationship continued between the two heirs.

One of Schoen's first duties, in addition to correcting errors made by McCuen, was to try to recover two properties, referred to as "C" and "H," from the decedent's brother, Glenn Parker. After months of failed negotiation, Parker sued the estate and trust, claiming ownership of the properties. Schoen counterclaimed to recover the parcels. The litigation lasted two years. At one point, the court entered summary judgment in favor of the estate, but Parker contested foreclosure. Parker also damaged a partially constructed well on Lot C, causing Schoen to seek injunctive relief. There were other complications, including a fire on one of the properties, and a petition for discretionary review that was eventually dismissed. Then, a newly assigned judge in the case resurrected some of Parker's claims. The parties settled their dispute in mediation. Parker returned the properties to the estate and paid $50,000 in settlement.

The trust and estate were complicated in other ways. Properties had to be managed, listed, and sold; Kirchan objected to some of the offers presented. Rents had to be collected, missing rents tracked, tenants evicted, and debts collected. Attorney fees relating to the removal proceedings had to be paid, properties distributed prior to death had to be tracked, and the final distribution adjusted. Tax and easement issues persisted throughout.

Because the estate was complex and potential future litigation was a concern, Schoen kept the estate and the trust open concurrently until late 2004. On May 5, 2005, Schoen filed and served a declaration of completion of probate. The heirs received notice, and filed no objection.1 The declaration of completion became a final order, equivalent to a decree of distribution, on June 5, 2005.

Schoen then filed a petition for final distribution of the trust. Two days before the non-oral argument hearing on the petition, Kirchan's new lawyer asked for a continuance and an accounting regarding all attorney, personal representative, and trustee fees. Schoen agreed to delay the hearing, and went to Kirchan's attorney's office the next day to review the accountings. On July 12, 2005, Kirchan filed an objection to the petition. In that objection, she included issues relating to the closed estate.

On September 29, 2005, the judge approved the petition, accountings, and distributions in every respect, but reserved approval on the issue of trustee and attorney fees. The court also noted that the declaration of completion of probate had become final "in all respects and without qualification on or about June 5, 2005." After consideration of supplemental declarations and argument regarding fees, the superior court approved them on November 16, 2005. In the final accounting, each trust beneficiary received approximately $232,000. Kirchan appealed, designating the September 29 and November 16 orders.

Appeal Relating to Estate

Kirchan raises two claims relating to the disposition of the estate: the personal representative should have applied for an estate tax refund, and the personal representative and attorney fees were not reasonable. Wills and trusts are separate legal documents governed by separate statutes.2 When the testator gifts assets from an estate to a trust, administration of those assets passes from the estate's personal representative to the trustee.3 From that point on, the terms of the trust and trust statutes govern disposition of those assets.4

A personal representative in a nonintervention probate can close the estate without seeking a decree from the court. He must file a declaration of completion of probate and give notice to the heirs.5 Beneficiaries may demand a report from the personal representative at any time before the estate is closed,6 and ask the court to hold the personal representative accountable.7 If no heir objects within 30 days, the estate is closed and the declaration of completion has the same effect as a final decree of distribution.8 The heirs lose their ability to challenge the actions of the personal representative,9 and all issues relating to probate become res judicata.10 Also, the court loses jurisdiction over the matter, except with respect to enumerated matters relating to absentee beneficiaries.11 Courts are reluctant to reopen closed estates except in cases of fraud, or when the decree of distribution is void.12

The estate in this case was properly closed, with notice and without timely objection. There is no allegation or evidence of fraud, nor any suggestion that the decree of distribution is void. The trial court properly recognized this fact when it acknowledged June 5, 2005 as the date of closing. This statement was not a final order of the court regarding the estate; it was a clarification that the estate had closed in June. Kirchan did not use the statutory tools available to her while the estate was open. Her first pleading in the matter was filed in response to the petition for final distribution of the trust; she filed it more than 30 days after the closing of the estate. At that time, all issues relating to the probate were res judicata.

Kirchan expresses concern about the possibility of "piecemeal" appeals from the two final orders disposing of the estate and the trust. However, this approach is mandated by the statutory framework, which considers estates and trusts to be separate legal entities. And although the requirement may seem judicially inefficient in this case -- where the personal representative is also the trustee, and the trust is closed only a few months after the estate -- an alternate rule could undermine the finality of probate proceedings in other cases. Not all trusts proceed to immediate distribution; often the corpus of the trust stays intact and income distributions are made to the heirs. If the heir to an estate who is also the beneficiary of a trust can wait until the trust is closed before appealing estate-related issues, then estates believed to be finally settled might be reopened and questioned years, or even decades, later.

Heirs who question the actions of a personal representative administering an estate must challenge those actions while the estate is still open, and appeal an adverse decree of distribution in a timely manner. Kirchan did not do so.

Trust-Related Fees

Kirchan timely challenges the petition for final decree of distribution with respect to the trustee and attorney fees. The court approved the trust-related fees in its order dated November 16, 2005. A trial court has discretion in determining the reasonableness of trustee and attorney fees, guided by the trustor's wishes as stated in the trust documents.13 Both decisions are reviewed for abuse of discretion.14 If substantial evidence supports the trial court's findings of fact, they will be upheld.15

McCuen's revocable living trust agreement provides for reasonable trustee fees. To determine whether trustee fees are reasonable, the court should consider: "(1) The amount of risk and responsibility involved, (2) the time actually required of the trustee in the performance of the trust, (3) the size of the estate, (4) the amount of income received, and (5) the manual and over-all services performed."16

Schoen collected $69,645.62 in trustee fees over four years, but his responsibilities for this sizable estate were considerable from the start. He was appointed to replace a trustee who was in a hostile relationship to the other principal heir. The former trustee had also failed to keep proper accounts, pursue the return of real property to the trust, appraise many properties, and resolve tax issues. The Parker litigation started almost immediately after Schoen's appointment, and lasted over two years. That litigation was bitter, but resulted in a relatively large recovery to the trust. Administration of the trust was complex and time consuming.

Substantial evidence supports the court's conclusion that the trustee fees were reasonable. Kirchan wrongly suggests that Schoen provided no justification or basis for his fees to the court. On the contrary, Schoen filed detailed accountings and numerous declarations supporting both the reasonableness of his rates and the number of hours worked. There was substantial evidence that the rates were justified.

Kirchan cites the rule in Absher Construction Company v. Kent School District No. 415,17 governing whether the time of non-lawyer personnel may be included in an attorney fee award. She argues that the rule should extend to the staff of a personal representative. We find no authority for, nor any persuasive argument to support this extension. A party under court order to pay attorney fees is in a different position from the heir to an estate. As happened in this case, the court and the heirs review the rates of a personal representative in advance, and can challenge monthly billings as they arise. If parties are unhappy, they can remove the representative. We decline to extend the Absher holding to a personal representative's staff.18

Surcharge of Attorney Fees Related to Kirchan's Challenge

Kirchan challenges the court's decision to surcharge her share of the trust $3,476 in attorney fees related to her objection. Kirchan argues that to uphold the surcharge, this court would have to overrule In re Estate of Larson in part.19 Schoen replies that RCW 11.96A.150,20 enacted in 2000, supersedes the 1985 holding in Larson. This decision is also reviewed for abuse of discretion.21

Schoen is correct. It is well settled that if a statute is inconsistent with the common law, the statute is deemed to abrogate the common law.22 RCW 11.96A.150 gives the trial court broad discretion to surcharge attorney fees to parties, or to the estate, in an equitable manner. It does not restrict or make any exception in the case of fee challenges. Although the primary issue in Larson was whether attorney fees were reasonable, one of the holdings is, "an attorney in probate is not entitled to additional fees for attorneys and experts in proving the reasonableness of his fee in the final report."23 To the extent that Larson conflicts with the exercise of discretion authorized in RCW 11.96A.150, it has been abrogated.

The trial court did not abuse its discretion by charging Kirchan attorney fees related to her objection. Over four years, Kirchan received regular and timely billings for trustee and attorney fees, but never objected or raised concerns until the decree of distribution was filed. In her objection, she improperly raised issues relating to fees from administration of the estate, and the attorney for the trust had to respond. Finally, she did not prevail in her challenge, and some of her arguments were of questionable merit. The surcharge was appropriate and not an abuse of discretion.

Attorney Fees on Appeal

Schoen requests attorney fees on appeal under RAP 18.1. We have discretion to surcharge Kirchan for the estate's attorney fees incurred in responding to this appeal.24 Because Kirchan's arguments are largely without merit, Schoen's request is granted.


Baker, J.


Appelwick, J.

J. Cox

1. Kirchan argued that she was not an heir to the estate. But she was named as an heir in the will and was treated as an heir throughout the entire probate. The fact that the pour-over provision moved estate assets into the trust is irrelevant to her legal status as an heir.

2. RCW 11.12.010 - .260 (wills); RCW 11.98.009 - .920 (trusts).

3. RCW 11.12.250. Although in this case Fred Schoen acted as both personal representative and trustee, the roles are legally distinct.

4. RCW 11.12.250.

5. RCW 11.68.100 - .110.

6. RCW 11.68.065; RCW 11.76.050.

7. RCW 11.68.070.

8. RCW 11.68.110(2); RCW 11.98.009 - .920.

9. Meryhew v. Gillingham, 77 Wn. App. 752, 753-54, 893 P.2d 692 (1995); 26B Cheryl C. Mitchell and Ferd H. Mitchell, Washington Practice: Probate Law and Practice § 4.54 (2006).

10. Norris v. Norris, 95 Wn.2d 124, 130-31, 622 P.2d 816 (1980).

11. RCW 11.76.247.

12. Pitzer v. Union Bank of California, 141 Wn.2d 539, 551-52, 9 P.3d 805 (2000).

13. RCW.11.96A.150(1) (attorney fees in trust and estate matters); In re Trust Estate of Powell, 68 Wn.2d 38, 40-41, 411 P.2d 162 (1966) (trustee fees).

14. In re Estate of Black, 116 Wn. App. 476, 489, 66 P.3d 670, rev. denied, 150 Wn.2d 1020 (2003), aff'd on other grounds, 153 Wn.2d 152, 102 P.3d 796 (2004); First Interstate Bank v. Lindberg, 49 Wn. App. 788, 801-02, 746 P.2d 333 (1987) (citing Allard v. Pacific Nat'l Bank, 99 Wn.2d 394, 406-07, 663 P.2d 104 (1983)).

15. Fred Hutchinson Cancer Research Ctr. v. Holman, 107 Wn.2d 693, 712, 732 P.2d 974 (1987).

16. In re Powell, 68 Wn.2d at 41.

17. 79 Wn. App. 841, 905 P.2d 1229, 917 P.2d 1086 (1995).

18. Kirchan makes no argument and cites no authority as to why the attorney fees charged to the trust are inappropriate. We need not consider an issue absent argument and citation to legal authority. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992); State v. Dennison, 115 Wn.2d 609, 629, 801 P.2d 193 (1990).

19. 103 Wn.2d 517, 533, 694 P.2d 1051 (1985).

20. "(1) Either the superior court or the court on appeal may, in its discretion, order costs, including reasonable attorneys' fees, to be awarded to any party: (a) From any party to the proceedings; (b) from the assets of the estate or trust involved in the proceedings; or (c) from any non-probate asset that is the subject of the proceedings. The court may order the costs to be paid in such amount and in such manner as the court determines to be equitable. (2) This section applies to all proceedings governed by this title, including but not limited to proceedings involving trusts, decedent's estates and properties, and guardianship matters. This section shall not be construed as being limited by any other specific statutory provision providing for the payment of costs, including RCW 11.68.070 and 11.24.050, unless such statute specifically provides otherwise." RCW 11.96A.150.

21. Estate of Kvande v. Olsen, 74 Wn. App. 65, 71, 871 P.2d 669 (1994).

22. State v. Butler, 126 Wn. App. 741, 750, 109 P.3d 493 (2005).

23. Larson, 103 Wn.2d at 533.

24. RCW 11.96A.150.

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