Probates for Profit?

This spring, the Washington Attorney General’s office filed a complaint against various individuals, business entities, and attorneys alleging an elaborate scheme to exploit the probate process. They filed probates, not to serve in a fiduciary capacity, but instead to engage in nefarious practices and self-dealing to make money. The complaint alleges, “[b]ecause Washington’s probate system relies heavily on ex parte proceedings, uncontested pleadings, and the honesty and integrity of those filing the pleadings, Defendants were able to open at least 213 probates between March 2019 and January 2024 before being discovered by authorities.” Complaint, Section 4.8.

The defendants’ alleged scheme is complex and disturbing. For a probate attorney, reading the complaint is a poster child for what not to do. The defendants filed probates when they had no relationship with the decedent pursuant to RCW 11.28.110(7) that allows “any suitable person” to administer an estate if no one else steps up to do the job within forty days. Notably, the complaint alleges that when the defendants filed the probates, they frequently failed to provide notice to identifiable heirs as is required by Washington. In some cases, they allegedly sent “‘notice’ to persons unconnected to the estate (or to made-up persons) in order to manufacture notice for the court.” Complaint, Section 4.21. This tactic made it impossible for the rightful heirs to object to the proceedings because they lacked knowledge that a probate was occurring in the first place.

Per the complaint, the defendants repeatedly violated their fiduciary duties to the estate by misappropriating assets, engaging in self-dealing, and co-mingling assets of various estates, often to disguise distributions to themselves. The defendants also did not follow Washington law in numerous probates, including failing to request the court’s permission for various transactions and failing to file annual reports informing the court of the estate’s status as required by RCW 11.76.101.

What steps can be you take to protect yourself and your loved ones from fraudulent schemes such as the conduct alleged in the complaint? Here are three important safeguards:  (1) have a Will, prepared by an attorney, and ensure loved ones can access the original document when needed; (2) Within your Will, nominate a personal representative and at least one alternate who is either a trusted family member, trusted friend, or a professional fiduciary doing business in Washington; and (3) make sure the personal representative, if an individual, knows, when the time comes, to seek representation from a reputable law firm to navigate the probate process, and to consult with that law firm in the course of hiring professionals to assist in various estate-related matters.

We shall see what happens with the Washington Attorney General’s efforts to ensure that our Washington probate system is used for what it is intended: ensuring that the decedent’s wishes are carried out to the extent possible and maximizing the funds received by the heirs – rather than finding ways for the fiduciaries and companies they own to misappropriate funds and assets for their personal gain.