Manary v. Anderson
176 Wash. 2d 342, 292 P.3d 96 (2013)
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Rule of Law:
The Washington Testamentary Disposition of Nonprobate Assets Act permits an owner to transfer an interest in real property held in a revocable trust to a testamentary beneficiary by specifically referring to the property in their will, even if the will does not mention the trust instrument itself.
Facts:
- In 1995, Homer L. and Eileen M. Greene, a married couple, created "The Homer L. Greene and Eileen M. Greene Revocable Living Trust Agreement" (Trust).
- Homer and Eileen, acting as trustors, grantors, and trustees, funded the Trust by conveying the title of their community property residence to themselves as trustees and all successor trustees, while retaining the right to possess and manage the property rent-free.
- The Trust agreement specified that it was revocable during their joint lifetimes, but upon the death of the first spouse, the surviving trustee was to divide the Trust into an irrevocable "Family Trust" (decedent's interest) and a revocable "Survivor's Trust" (surviving spouse's interest), and the entire Trust would become irrevocable upon the death or incapacity of both trustors.
- In 1998, Eileen died, and Homer became the sole trustee; however, he did not create separate Family and Survivor's Trusts.
- In 1999, Homer amended the Trust, removing the original beneficiaries and naming his sister, Alice Manary, as the sole beneficiary and first successor trustee, and his nephew, Jeffrey Manary, as the second successor trustee.
- Beginning in 2002, Edwin A. Anderson became Homer's companion and caretaker, living in a trailer on the property and providing assistance with Homer's daily needs.
- On November 4, 2004, Homer executed a last will and testament that did not mention the Trust, but specifically bequeathed the real property (his home at 18616 102nd Ave S.E. Renton, WA 98055, referencing Tax # 3223-9085-09) to Edwin A. Anderson.
- In 2007, Homer died, and Anderson subsequently took possession of the residence on the property.
Procedural Posture:
- In October 2008, Alice Manary initiated an action in King County Superior Court (trial court) to quiet title to the property and eject Edwin A. Anderson.
- Anderson filed a counterclaim, also seeking to quiet title to the property in his name.
- Alice Manary died in 2009, and Jeffrey Manary, as the second successor trustee, was substituted as the plaintiff in the action.
- Both parties submitted cross motions for partial summary judgment, each claiming a right to Homer's interest in the property.
- The trial court ruled in favor of Jeffrey Manary, concluding that Homer’s attempted bequest was invalid due to his failure to modify the Trust or acknowledge it in his will, and quieted all title interests in the Trust while dismissing Anderson’s counterclaims with prejudice.
- Anderson appealed the trial court’s decision to the Washington Court of Appeals.
- The Court of Appeals reversed the trial court's decision, finding for Anderson, holding that the property was a "nonprobate asset" and that Homer’s specific bequest made Anderson the rightful owner, as the statute did not require the will to mention the trust.
- Jeffrey Manary sought review from the Washington Supreme Court, which was granted.
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Issue:
Does the Washington Testamentary Disposition of Nonprobate Assets Act (RCW 11.11.020(1)) permit an owner to transfer an interest in real property held in a revocable living trust to a testamentary beneficiary by specifically referring to the property in their will, even if the will does not explicitly mention or modify the trust instrument?
Opinions:
Majority - Fairhurst, J.
Yes, the Washington Testamentary Disposition of Nonprobate Assets Act permits an owner to transfer an interest in real property held in a revocable living trust to a testamentary beneficiary by specifically referring to the property in their will, even if the will does not explicitly mention or modify the trust instrument. The court undertook statutory interpretation, emphasizing the plain meaning of RCW 11.11.020(1) and the Act's purpose to enhance testators' power to control nonprobate assets, requiring liberal construction. The court determined the property was a "nonprobate asset" under former RCW 11.02.005(15) because Homer had beneficial ownership during his life, and his interest passed under a written instrument (the Trust) other than his will. It found that the Trust remained revocable as to Homer’s interest, as the Trust terms allowed him to retain his interest in the original trust as the 'Survivor’s Trust' and specified that the entire Trust became irrevocable only upon the death of both trustors. The court clarified that the exclusion in RCW 11.11.010(7)(a)(ii) for deeds where possession is postponed applies to an owner's future interest in property, not a beneficiary's postponed possession, to avoid rendering other statutory language superfluous. Homer qualified as an "owner" and Anderson as a "testamentary beneficiary." Crucially, Homer "specifically referred to" the property in his will by providing its street address and tax parcel number, and the Act does not require the will to mention the trust instrument itself. The court rejected Manary's procedural and substantive arguments, affirming that the Act allows a will to supersede specific trust modification requirements. Thus, Homer complied with the Act, and Anderson is entitled to Homer’s interest in the property. The court denied Anderson's request for attorney fees for answering the petition for review.
Dissenting - Stephens, J.
No, the property at issue was not a nonprobate asset under the Act, and therefore Homer could not transfer it to Anderson by will. Justice Stephens dissented, arguing that the property did not qualify as a "nonprobate asset" for two primary reasons. First, she contended that the Trust became irrevocable upon Eileen's death because Homer failed to follow the Trust's clear directive (Section 3.02) to create separate Family and Survivor's Trusts. Since the Trust was no longer revocable by Homer, it could not be characterized as a revocable trust becoming effective or irrevocable upon the grantor’s death, which is a requirement for it to be a nonprobate asset. Second, even if the Trust were considered revocable, the dissent asserted the property fell under the specific statutory exclusion in RCW 11.11.010(7)(a)(ii) for a "deed or conveyance for which possession has been postponed until the death of the owner." The dissent clarified that this exclusion refers to the beneficiary's postponed possession of the property, which explicitly applied here as the Trust terms postponed conveyance until the surviving trustor's death. Justice Stephens argued that the majority's interpretation undermined legislative intent, particularly regarding real property and the importance of certainty in recorded land titles, which the Act's exclusions were designed to protect. She concluded that allowing a will to transfer property without mentioning the recorded trust instrument creates precisely the title record issues the legislature sought to avoid.
Analysis:
This case provides crucial clarification on the scope and application of Washington's Testamentary Disposition of Nonprobate Assets Act, commonly known as the "Superwill" statute. It decisively establishes that a properly executed will can override prior nonprobate beneficiary designations for assets like real property held in a revocable trust, even when the will does not explicitly reference or modify the trust instrument. The decision underscores the legislature's intent to empower testators by broadly interpreting key statutory terms and mandating a liberal construction of the Act. This ruling may enhance flexibility for estate planning but could also introduce complexities for beneficiaries who relied on existing trust documents, potentially leading to increased scrutiny of wills and their specific asset descriptions in future disputes involving nonprobate assets.
