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In re Estate of Meeks

Court of Appeals of Washington, Division 3

July 12, 2018

In the Matter of the ESTATE OF MABEL MEEKS, and, L/M MEEKS NO. 1 TRUST.

          OPINION

          Siddoway, J.

         Lisa Wuerch, successor trustee of the L/M Meeks No. 1 Trust and personal representative of the estate of Mabel Meeks, appeals the trial court's reformation of Ms. Meeks's 1994 will and its award of attorney fees and costs to the Fred Hutchinson Cancer Research Center (Fred Hutchinson). Clear and convincing evidence supported Ms. Meeks's effort to make changes to her estate plan. But evidence does not support the reformation of her 1994 will. In substance, the trial court reformed a 2005 attempt at what needed to be, but was not, a testamentary transfer. We are constrained to reverse. We remand the issue of any attorney fees and costs to be awarded to the parties to the trial court.

          FACTS AND PROCEDURAL BACKGROUND

         Estate Planning History

         In March 1994, Lloyd and Mabel Meeks executed a trust agreement creating the L/M Meeks No. 1 Trust and identifying themselves as co-trustees. From the schedule of assets assigned and transferred to the trust, it appears they contributed to the trust all or most of their bank accounts, certificates of deposit, real estate, vehicles, securities, and personal property. On the same day, Mr. and Ms. Meeks executed twin wills, simple in form, which recognized as valid any written disposition of tangible personal property they might later prepare, but that otherwise gave, devised and bequeathed their estates to the trust.

         The first purpose of the trust was to support the grantors during their joint lifetimes and the survivor following the death of the first to die. Upon that first death, the trust contained a common tax planning directive to fund a "By-Pass" trust with an amount of assets that would take full advantage of the unified credit applicable to federal gift and estate taxes. Any remaining assets were to be placed in a separate trust qualifying for the unlimited federal estate tax marital deduction. Assets remaining in either of the two trusts following the death of the second grantor were to be distributed 80 percent to the Meeks's only child, Mary, with the remainder to be distributed to several individuals and Catholic charities identified by the trust.

         During the grantors' joint lifetimes, the terms of the trust allowed for its revocation, modification, and for assets to be withdrawn. "Upon the death of the first Grantor," however, the trust provided, "this Agreement shall not be revocable in whole or in part nor subject to amendment." Clerk's Papers (CP) at 8. Notwithstanding the irrevocable character of the trust following the death of the first grantor, the trust agreement did provide the surviving grantor with a limited power of appointment over the By-Pass trust. The limited power could be exercised by the surviving grantor only in favor of lineal descendants of the Meeks's marriage, spouses of their lineal descendants, or tax-exempt religious, charitable, scientific, literary, or educational organizations. The trust further provided that the power "may be exercised only in a provision specifically describing this power of appointment contained in the Last Will of the surviving Grantor." CP at 10.

         Lloyd Meeks was the first to die, in September 2002. It is undisputed on appeal that all of the Meeks's real and personal property had been transferred to the trust before his death. While the record does not reveal the size of his estate, it is undisputed on appeal that it was less than the amount excluded from federal estate taxation at the time, meaning that all of the assets should have been segregated into a By-Pass trust. Ms. Meeks did not comply with the trust directive to retitle trust assets as assets of a By-Pass trust.

         Not long after Mr. Meeks's death, Ms. Meeks contacted the lawyer who had prepared the couple's estate planning documents about changing the distribution of the trust assets following her death. Ms. Meeks wished to slightly reduce the percentage bequest to Mary to 75 percent of the estate, to cap all of the existing bequests by dollar amounts, to reduce some bequests, add two additional individual beneficiaries, and leave any remaining assets to Fred Hutchinson for breast cancer research. (Ms. Meeks was a breast cancer survivor.) Rather than prepare a new will or codicil to Ms. Meeks's 1994 will exercising her limited power of appointment, the lawyer prepared a first amendment to the trust. Ms. Meeks executed the amendment in December 2002.

         In 2005, Mary died of glioblastoma multiforme cancer. After Mary's death, Ms. Meeks contacted her lawyer again, to address further changes to the distribution of the trust assets, including what she wanted done with the majority of the estate that had been intended for Mary. She wished to add a new individual beneficiary, make relatively small bequests to two additional charities, and make a large, $100, 000 bequest for a scholarship fund for working single mothers to be established at the Community Colleges of Spokane, where Mary had worked. She wished for the larger residual estate to be distributed one-half to Fred Hutchinson and one-half to its research partner, the University of Washington, solely for the research of glioblastoma multiforme cancer. Ms. Meeks's lawyer prepared a second amendment of the trust that made these changes. Ms. Meeks executed the second amendment in October 2005.

         Ms. Meeks died in March 2015. She had never executed a new will or codicil exercising the limited power of appointment provided by the trust agreement.

         Procedure

         Lisa Wuerch, a niece of Mr. and Ms. Meeks, was named a successor personal representative by Ms. Meeks's will and a successor trustee by the trust. In May 2015, she filed a petition to open trust file in which she sought a judicial determination of the validity and enforceability of the first and second trust amendments, eventual approval of an accounting, and compensation for her service as trustee. She sought and obtained court approval of the identity of the individuals and charities entitled to notice of the proceeding. The court later certified Ms. Wuerch's status as successor trustee and approved reasonable compensation subject to her maintaining true and accurate contemporaneous records.

          Fred Hutchinson obtained a court order authorizing the Meeks's estate planning lawyer to produce his records pertaining to Ms. Meeks's estate plan. He produced all records other than his work product. Based on his records and affidavits from other witnesses, Fred Hutchinson moved the court for an order confirming the validity of the trust amendments.

         In its legal briefing to the court, Fred Hutchinson argued first that the court should reform the trust under RCW 11.96A. 125-specifically, that it should "reform the provision purporting to prohibit amendments to the Meeks Trust and find that Ms. Meeks was entitled to amend the Meeks Trust in order to make [Fred Hutchinson] a ...


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