December 2002

TEDRA in a Teacup: A Brief Look at the Trust and Estate Dispute Resolution Act

by Stephen M. Gaddis and Richard T. Cunningham

Note: The following comments are those of the authors alone, and do not necessarily represent the conclusions or positions of any other person or entity.

The 1999 Washington State Legislature enacted the Trust and Estate Dispute Resolution Act (TEDRA), effective January 1, 2000. The law was codified as RCW 11.96A. The Bar committee which proposed the law returned to the Legislature in the 2000 session with technical amendments which were subsequently adopted. This article discusses the parameters and specifics of the changes it effected.

While certain legal observers have reached differing conclusions as to whether TEDRA represents a comprehensive fine-tuning of the now-repealed RCW Chapter 11.96 or a wholesale restatement and rearrangement of all probate procedures, this really appears to be more an issue of form over substance. To date, the consensus of those in practice appears to be that the procedures set forth in Title 11 prior to the enactment of TEDRA remain in place, and additionally the practitioner is given the tools provided by the TEDRA amendments. So notwithstanding whether TEDRA is viewed as an all-encompassing redrawing of the framework in which probate matters are resolved, or merely a specification of supplemental procedures, practices may, but need not, change.

TEDRA affords great latitude to parties to effect a voluntary resolution of a probate matter. They may do this by entering into a binding agreement. RCW 11.96A.220. The agreement may be kept confidential from the public and successor beneficiaries (who were virtually or specially represented), and may be filed without being shown to a judge. If the agreement is filed without being shown to a judge, it "will be deemed approved by the court and is equivalent to a final court order binding on all persons interested in the estate or trust." RCW 11.96A.230(2). Alternatively, the agreement may be submitted for court approval. RCW 11.96A.240. The court shall determine whether or not the interests of the represented parties have been adequately represented and protected, and an order declaring the court's determination shall be entered. Id.

Special representatives should take note that the submission of the agreement for court approval will protect them from liability by accelerating the statute of limitations. See RCW 11.96A.070(3)(c)(i).

TEDRA deals with the issue of representation of minors, incapacitated persons, and missing and unascertained beneficiaries by the appointment of a "special representative." This person, unlike a guardian ad litem, is selected by the personal representative or trustee. The court must approve this nomination unless it enters findings of good cause to the contrary. RCW 11. 96A.250. However, should the court appoint a guardian ad litem, that appointment may supercede the need for, or appointment of, a special representative. RCW 11.96A.160.

The express provisions of TEDRA encourage private dispute resolution by providing for referral on petition of a party or on the court's own motion to mediation or arbitration at any point in the proceeding. RCW 11.96A.300-310. If a party objects, the court shall order mediation except for good cause shown. That determination is not subject to appeal or revision. RCW 11.96A.300(2)(d).

A distinct process, complete with 20-day summons and petition, is provided as a procedure for contested actions under RCW Title 11. The summons requires no specific answer time other than not later than five days prior to a hearing on the petition, to be heard at least 20 days later (there is no distinction whether service is in or out of state). RCW 11.96A.090-110. If the proceeding is commenced as an action incidental to an existing proceeding relating to the same matter, a summons will only need to be served to the parties who were not already parties to the existing proceeding. RCW 11.96A.100(2).

The procedure under RCW 11.96A.090-110 is an alternative procedure in matters where procedures are already enumerated in the Probate Code (RCW Title 11). RCW 11.96A.080 states that "the provisions of [RCW 11.96A] shall not supercede, but shall supplement, any otherwise applicable procedures contained in [RCW Title 11]." Therefore, the various procedures enumerated in the Probate Code (RCW Title 11) for the adjudication of matters are still effective, and the procedure under RCW 11.96A.090-110 may, but need not, be used. There are several contested or potentially contested matters that already have enumerated procedures, such as the admission of a will to probate, the court's approval or rejection of a creditor's claim, and the removal of a personal representative or trustee, to name a few. However, when there are no enumerated procedures for judicial proceedings, the default procedure will be the procedures under RCW 11.96A.090-110.

Under TEDRA, every superior court has original jurisdiction to hear matters. In probate proceedings, RCW 11.96A.040 allows a party to select the venue for a proceeding. For example, a probate proceeding for a decedent who resided in Kitsap County may be commenced in King County. This may be convenient if all the heirs and personal representatives live in King County; however, if any party objects to the venue and if good cause cannot be shown why the proceedings have been commenced in King County, the proceedings will be moved to the county of the decedent's residence. RCW 11.96A.

050(3).

TEDRA built on the foundation of existing law by acknowledging the doctrine of "virtual representation," whereby existing beneficiaries who stand in the shoes of contingent or successor beneficiaries are deemed to fully represent the successors' interests, notwithstanding any potential conflict which one class might have with another. RCW 11.96A.120. If an actual conflict of interest exists between the classes, virtual representation cannot occur. RCW 11.96A.120(3).

The changes effected by TEDRA increase the ability of the parties and practitioners to resolve matters out of court, and to have additional formal procedures for resolution within the framework of the court. While some of the procedures are far more cumbersome (mediation, for example) than existing procedures (the citation process or filing a simple petition in probate, for example), they may afford a more comforting level of due process. However, some of the more expansive doctrines will have to await appellate approval or interpretation before they can be fully utilized with confidence. Only the test of time will disclose whether the substantial grant of authority given to parties of non-judicial agreements will continue to protect the interests of minors, incapacitated persons, and missing and unascertained beneficiaries as well as court processes have in the past. For further insight into the use and application of TEDRA in probate settings, practitioners may wish to consult the latest edition of the King County Probate Policy Manual, being released in spring 2003.

Richard T. Cunningham is an associate with Riddell Williams PS, and is a member of the firm's trusts, estates and personal planning, and tax practice groups. Mr. Cunningham received his J.D. from the University of Washington School of Law and his LL.M. in taxation from the University of Washington. He is a member of the committee drafting the latest edition of the King County Probate Policy Manual.