Washington Considers New Law to End “Probates for Profit”

Over the past year, Stacey and I wrote about the troubling “probates for profit” scheme in Washington, where third parties repeatedly petitioned courts to administer estates with minimal oversight, then sold estate assets and profited accordingly, often at the expense of rightful heirs. Several criminals and their associated companies have been found guilty of these alarming acts. To prevent this type of fraud from occurring in the future, the Washington legislature introduced House Bill 2445, a bill aimed squarely at closing the statutory loopholes that made these abuses possible in the first place.

Here are some of House Bill 2445’s key takeaways:

1. Enhancing probate petition requirements, such as detailing efforts to locate heirs, including the names, ages, and addresses of any discovered heirs, and describing the estate’s major probate assets such as real property and vehicles.
2. Setting forth additional requirements to obtain an order appointing a personal representative and tightening the requirements for strangers, also known as “suitable persons,” to step in. Additional requirements for the order appointing a personal representative include prioritizing the surviving spouse, next of kin, beneficiaries, and other close parties to administer the decedent’s estate. If none of these individuals step forward within 60 days, then the court may appoint a third party to administer the estate. This proposed change is designed to ensure that estates are handled primarily by those with a genuine relationship to the decedent, rather than opportunistic outsiders.
3. Creating more limitations on who is not qualified to serve as a personal representative, for example, anyone found in the last 36 months to have engaged in an act of dishonesty, theft, or committed a fiduciary breach.
4. Limiting personal representatives appointed under the “suitable person” provision from purchasing or receiving sale proceeds from estate assets for their personal benefit without prior court approval.
5. Requiring probate proceedings to be filed generally in the county of the decedent’s residence or where the assets are located, rather than allowing petitioners a wide choice of probate venue. While this proposed change is aimed at preventing forum-shopping, it also creates  practical problems.  In many cases, it is both financially and administratively efficient to file a probate in a county where the personal representative resides, for example, rather than where the decedent resided.

In conclusion, House Bill 2445 marks a legislative effort to protect heirs and decedents’ estates from predatory practices while preserving legitimate probate administration. For estate planners and fiduciaries, it highlights the importance of thorough planning (including clear nominations of personal representatives and up-to-date wills) to avoid default intestate procedures, which are now under heightened scrutiny.  However, while the bill raises important issues and attempts to address real misconduct, it still needs further hearings and stakeholder input to ensure it strikes the right balance of protecting estates from fraud without unnecessarily restricting the personal representative’s flexibility in the administration of the estate.  Please contact our office if you have questions about how these proposed changes could impact your estate planning or probate matters.