What Happens if a Washington Trust Beneficiary Refuses to Accept a Distribution?

People often create revocable trusts in an attempt to keep their estate planning private. Unlike a will, which is subject to court-administered probate in Washington, a trust is generally not a matter of public record. That said, lawsuits can and do arise over the administration of trusts, in which case their provisions can still become publicly known.

Judge Orders Siblings to Accept–or Disclaim–Trust Property from Their Sister

The Washington Court of Appeals recently addressed just such a dispute. This case, In the Matter of Estate of Ferara, involved a disagreement among a group of siblings over the administration of their parent’s trusts. The mother and father each established their own trust and one jointly established family trust. The family trust included four pieces of real estate, two in Washington and two in California.

The parents had six adult children. When the father died in 2016, his wife became trustee of his trust. She subsequently resigned from that role and declined to serve as trustee of the other two trusts. The trustee’s role for all three trusts then fell to one of the children, Diana. After the mother’s death in 2020, Diana attempted to distribute the four properties as directed by the trusts.

Under the family trust, one of the California properties was to be distributed to two of the children, Alicia and Kristy. But they refused to accept the property. They alleged that Diana had mismanaged the property in her capacity as trustee and demanded she return it to “a good and reasonable condition” before they would accept it.

In response, Diana filed a petition in Washington court to compel her siblings to either accept the California property or disclaim their interest in it. Four of the siblings then counter-sued Diana, formally accusing her of breaching her fiduciary duty as trustee. The trial court ended up granting summary judgment to Diana and ordered Kristy and Alicia to accept the California property within 30 days or forfeit their right to receive it altogether.

The Court of Appeals upheld the judge’s decision. The appellate court noted the siblings failed to present any admissible evidence of Diana’s purported mismanagement of the California property. In contrast, Diana submitted reports from the company she hired to manage the property, which said the condition had “improved considerably” since she took over as trustee. As for the trial court’s remedy, the Court of Appeals noted that Washington law allowed superior courts to exercise broad authority when it came to administering the terms of a trust. In this case, if a beneficiary chose not to accept a distribution, the court could impose a “constructive disclaimer” and allow the property to pass under the trust as if the siblings had predeceased their mother.

Contact Moulton Law Services Today

Even the best-laid estate plans can lead to litigation when a disagreement arises among the beneficiaries. An experienced estate planning lawyer can advise you of your rights when such disputes occur. Contact Moulton Law Offices, P.S., today to schedule a consultation. We serve clients throughout Spokane, Kennewick, and Yakima.

Source:

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