Posts Tagged ‘Washington Court of Appeals’

Notarized Will Fails for Lack of Witnesses

MAY 16, 2016 VOLUME 23 NUMBER 19

Frankly, we are surprised by the number of cases we see in which wills are improperly prepared or signed. The rules governing wills are not really that complicated, and it should be pretty straightforward to comply with them. The cases we see mostly involve people who want to save a couple bucks, and so do their estate planning themselves — who needs legal help to handle those simple rules, right? Except that they keep making mistakes.

One basic rule (there are exceptions, but let’s get the rule straight first): a will needs to be in writing, signed by the person whose will it is (the testator), and witnessed by two people who see the testator signing the will. Ideally, the witnesses should both be in the room together with the testator and sign the will immediately.

So-called “holographic” wills can also be valid in Arizona, so long as they are actually in the handwriting of the testator (and signed). No witnesses are required on a holographic will. Still, we wonder why anyone would rely on this type of will, when it is probably not very difficult to rustle up two witnesses.

Does a will need to be notarized? No. In fact, notarization does not help with the witness requirement, so a will with one witness and a notary is not valid (in Arizona — other states may be different). The notion that the notary makes a will “official” in some way is a misguided one.

Arizona has a case that many might consider surprising, in which a witness signed the will after the testator’s death. Understand that the witness was present when the will was signed, and when another witness signed, but simply did not put pen to paper until the problem was pointed out in probate proceedings. The Arizona courts ruled that the delayed signature was permissible, and the will was valid.

That Arizona case is the background for a Washington will contest concluded last week — with a different outcome. It involved a Washington resident (we’ll call him Ben Hamilton) who spent his winters in Arizona. He had a valid will, signed in Washington in 1988, and a valid codicil, signed (again in Washington) in 1999. They left everything to his brother.

In 2011, when Ben was 77, he had heart surgery in Washington. After the surgery he went to live with his brother, but soon was eager to leave. He contacted friends in Arizona, and two of them drove to Washington, picked Ben up, and took him to Arizona.

While in Arizona, Ben prepared a new will. He and one of his friends went to the office of a local notary public, and Ben signed the will in front of the notary and his friend. The notary signed and applied her notary stamp; the friend did not sign.

Five days later, Ben committed suicide. Back in Washington, his brother filed the 1988 will and 1999 codicil with the probate court. Ben’s Arizona friends tried to figure out what to do with the new will Ben had signed. They sent it to a lawyer in Washington, asking for advice about whether it could be filed with the probate court there.

After the Washington lawyer found the Arizona case on late witnessing, the friend who had actually been present for the signing went to Washington, signed the document as a witness and left it for submission to the Washington court. The lawyer filed it, arguing that it revoked the 1988 will and 1999 codicil.

Ben’s brother moved for summary judgment, arguing that the purported will would be invalid under Arizona law because a notary is not a “witness” in the context of will signing. Although that is a correct statement of Arizona law, the Washington probate judge at first denied the motion. Then Ben’s brother argued that the will should be evaluated under Washington law, and the probate court agreed. The challenge to Ben’s 1988 will and 1999 codicil was dismissed.

The Washington Court of Appeals agreed with the probate court. Since Ben’s friend was actually in Washington when she signed as a witness, ruled the appellate court, and since that was the final step necessary to make it a valid will, it had been executed in Washington. Under Washington law, the late witnessing would be ineffective, and the “will” was not valid. Estate of Hook, May 9, 2016.

Although the Washington court might not have been familiar enough with Arizona law to be comfortable ruling on the validity of the document in Arizona, the outcome would have been the same. Even though Arizona has permitted witnesses to sign even after the death of the testator, Arizona has also ruled that a notary is not a witness, or at least not when they sign using their notarial authority and seal. The notarial act, according to the Arizona courts, is different from witnessing — it is just a determination that the signer is who they claim to be, not an affirmation that they intend the effect flowing from signing the document. So Ben’s will would have been invalid even if Arizona law had been applied.

But that begs the question: why didn’t Ben just get some competent legal advice? Just because a notary public signs legal documents it does not follow that they know the rules for preparing or witnessing a will. Presumably Ben had some specific things he wanted to accomplish when he prepared and signed his new document. Was it not important enough to get some legal advice about how to make it work?

Obviously Ben was under a lot of pressure and, probably, preoccupied. Still, he did not accomplish what he seems to have wanted, and it would have been easy to do so. His story is cautionary — on a number of levels.

Conservator Has Authority Over Property In Another State

FEBRUARY 15, 2016 VOLUME 23 NUMBER 7

We live in an increasingly mobile world. That assertion is hardly controversial. The reality that America’s patchwork of over fifty separate legal jurisdictions can make for confusion and conflict is well understood by lawyers and observers. A recent guardianship and conservatorship case involving two states (neither of them Arizona) illustrates how that confusion can play out.

Ben Marvel (not his real name) bought a house in Spokane, Washington, in 2001. He let his daughter Melinda live there with her kids, and he stayed in the home from time to time — he also lived part time in Idaho. In about 2007, he moved in with his daughter and her family full-time.

At about that time, Melinda sued Ben for allegedly concealing her late mother’s will and failing to transfer her assets as directed by that will. As a result of that litigation, Ben agreed to transfer the Spokane house to Melinda; he signed a quit claim deed to her in mid-2007, and the lawsuit was dismissed a few months later. Melinda did not immediately record the quit claim deed.

Meanwhile, Ben’s son initiated a conservatorship proceeding in Idaho, and the Idaho court determined that Ben was an Idaho resident, that he lacked capacity to make his own financial decisions, and that a professional fiduciary should be appointed. Because Ben’s assets were limited, the Idaho conservator was directed to “facilitate” a reverse mortgage on his home in Spokane.

The reverse mortgage was signed in October, 2007, and the conservator received funds that helped pay for Ben’s care. Meanwhile, a few months later, the Washington court (where Melinda’s lawsuit had been dismissed) signed a new order and judgment confirming that Melinda owned the Spokane property; that judgment indicated that it would be nunc pro tunc — that is, that it would be effective as of the original date on which the lawsuit had been dismissed.

Ben died in 2011, and the reverse mortgage became due. The bank granting the reverse mortgage ultimately initiated foreclosure proceedings, and Melinda objected that the house was hers, that Ben did not own any interest in it, and that the Idaho courts had no jurisdiction to authorize a reverse mortgage over Washington property anyway.

To clarify this confusing story, this timeline might be helpful (we’ve added a sprinkling of dates not included in the above narrative):

  • 2001: Ben purchases Spokane house
  • Early 2007: Ben moves into Spokane house with Melinda’s family; Melinda sues Ben
  • June 28, 2007: Ben signs quit claim deed conveying house to Melinda
  • August 22, 2007: Washington court dismisses Melinda’s lawsuit
  • August 27, 2007: Idaho court initially appoints conservator for Ben
  • October 22, 2007: Idaho court directs conservator to facilitate reverse mortgage
  • October 25, 2007: Idaho conservator signs reverse mortgage documents
  • Early 2008: Washington court files judgment finding house belongs to Melinda, dates it for August 22, 2007
  • 2008: Idaho conservatorship terminated; Washington conservatorship takes over
  • March 12, 2011: Ben dies
  • December 8, 2011: Melinda finally records the quit claim deed signed by Ben in 2007
  • 2012: bank initiates foreclosure on reverse mortgage

There are several legal questions posed by this confused history. Can any individual secure a reverse mortgage (or a conventional mortgage, for that matter) on property that they no longer own? Can the failure to record a deed, coupled with the failure to get the court to enter a judgment, permit someone who doesn’t really own property to encumber it? Is there some explanation for everyone’s actions in this scenario? All are interesting questions. But the legal issue that catches our eye is this: can an Idaho conservatorship court make any findings affecting real estate in Washington?

In general terms, real estate is subject to the jurisdiction of the courts where the property sits, and not other courts. In Ben’s case, however, the bank argued that his Idaho conservator had the authority to handle all of his property and finances — regardless of where they might be located. Melinda, on the other hand, challenged the very power of the Idaho court to approve, direct, or even facilitate a reverse mortgage on out-of-state property.

The trial court in Washington decided that the reverse mortgage was valid, and that the bank could foreclose on the loan. The Washington Court of Appeals reversed, finding that “the Idaho court lacked authority to authorize a conservator to encumber the Spokane residence.”

The case went on up to the Washington Supreme Court, which agreed with the trial judge. The Idaho conservatorship proceedings, it decided, were entitled to “full faith and credit” under the U.S. Constitution, and the Idaho courts had considered and decided the question about whether Ben resided in Idaho or Washington at the time its proceedings were initiated.

The Washington high court also decided that, while the Idaho courts would not have had authority to change ownership of the real property in Washington, they could enter orders that indirectly affected ownership of that property. As an analogy, the justices noted that an Idaho court could enter an order in a divorce proceeding that directed one spouse to sign a deed to Washington property; the court’s power over the individual would permit it to affect the real estate in another state.

Once the state’s high court decided that the Idaho conservatorship orders were valid and enforceable, the problem became whether to find the mortgage itself to be valid. Since the deed conveying the property to her had not been recorded, the bank had no reason to ask her if she claimed some interest in the property. The bank’s reliance on the record ownership and the authority of the Idaho conservator was sufficient to find the mortgage to be valid. Onewest Bank, FSB v. Erickson, February 4, 2016.

Attorney Representing Incapacitated Adult Ordered to Refund Fees

JUNE 22, 2015 VOLUME 22 NUMBER 23

How much does it cost to establish a guardianship or conservatorship? Is there any limit on the possible legal costs? These are questions that we deal with on a regular basis.

The short answer, at least in Arizona, is that the attorneys and other professionals in a guardianship/conservatorship proceeding can only charge a “reasonable” fee, and that the Court almost always has the authority to review — and, in appropriate cases, reduce — the fees charged. But that doesn’t help identify what a “reasonable” fee might be.

A recent case from the Washington Court of Appeals sheds a little light on attorneys’ fees in guardianship cases. It also helps make clear that the court’s review includes fees incurred — and paid — before any finding of incapacity was entered.

Kamiko Davis (not her real name) came to the attention of state officials because she had apparently been the victim of financial exploitation. She was an elderly woman who had, years before, immigrated from Japan, and she was more comfortable speaking Japanese. She was suspicious and uncooperative with authorities, and, after the financial exploitation she had suffered, she had an estate of about $700,000. When the investigating agency filed a petition asking for appointment of a guardian (of the person and the estate — what we would call guardianship and conservatorship in Arizona), it was evident that she would benefit from having a lawyer who spoke at least some Japanese, and who would be familiar with Japanese culture and traditions.

That’s how attorney Daniel Quick was appointed as Kamiko’s attorney. In the initial appointment the judge ordered that Mr. Quick’s fees should be limited to $250/hour for a maximum of 10 hours — or about $2,500. Over the next few months, as it became apparent that Kamiko would strenuously object to the legal proceedings at every turn, the court increased the maximum number of hours that could be billed — to a total of 50 hours.

Kamiko signed a durable power of attorney naming her attorney as her agent (for both medical and financial purposes), and a fee agreement with no limitation on the number of hours which might be billed. At some point the probate court decided that Kamiko had not had the capacity to sign the power of attorney, and eventually a limited guardian (of Kamiko’s person and of her estate) was appointed.

The attorney then filed his request for approval of fees charged for his representation. The application showed that he had received $118,110.65 already, and requested an additional $17,137.50 in fees and costs.

The probate court declined to approve Mr. Quick’s additional fees, and ordered that he return all but $30,000 of the fees he had already collected. The judge’s reasoning: whether or not Mr. Quick legitimately put in all the time he claimed, the total amount of fees was simply unreasonable. The $30,000 approved worked out to about 120 hours of legal work (assuming the same $250/hour), and the judge was critical of the attorney’s failure to limit litigation costs, even if his client was difficult to deal with and required special attention.

The Washington Court of Appeals upheld the limitation on attorney’s fees. Even though Kamiko had not been adjudged incapacitated at the time she signed a fee agreement, she was ultimately found to need a limited guardian — and a finding of incapacity was entered at that time. Besides, the appellate court noted, Mr. Quick had been ordered to limit his hours in earlier court rulings, and the amount ultimately approved actually exceeded those limitations.

The bottom line, according to the Court of Appeals: “The court, in overseeing guardianships, must weigh the competing concerns of individual autonomy and protection of incapacitated persons.” That meant that the reduction in allowed fees, and the order for return of over $80,000 in fees already collected, were appropriate in the circumstances. Guardianship of Decker, June 16, 2015.

Would the same result be reached in an Arizona proceeding? Very likely (although, of course, very small changes in the fact pattern might yield very different results). Arizona’s statutes expressly give the probate court the authority to review fees — for attorneys and for other professionals — in guardianship and conservatorship proceedings (Washington’s statutes were held to give that authority, too, but not as clearly or explicitly as Arizona’s laws).

Arizona also has an existing appellate decision which clearly enunciates some of what the Washington Court of Appeals articulated. In 2010, in Sleeth v. Sleeth, the Arizona Court of Appeals ruled that the litigants in guardianship and conservatorship proceedings must pay attention to whether legal fees are ultimately in proportion to the benefit enjoyed by the estate. The underlying facts are strikingly similar: the Arizona case involved assets of slightly more than those in the new Washington case, and legal fees that were larger by a similar proportion. One important difference: the lawyers whose fees were challenged in Arizona represented the guardian/conservator, not the subject of the proceeding.

 

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