TO: Dispute Resolution Center Mediators
FROM: Amanda Smith, Special Representative for Darla Johnson
RE: Walter Johnson Estate
Mediation: April 24, 2004
I have been appointed the Special Representative for the purposes of this mediation
to represent Darla Johnson. Darla is the teenage daughter of Walter Johnson
who passed away on January 1, 2004. Darla’s mother, Meg Johnson, is Mr.
Johnson’s second wife. Mr. Johnson had a child (Bill Johnson) from his
first marriage.
As Special Representative I have a fiduciary duty to ensure that Darla’s
interests are protected and advocated at the mediation. Under Mr. Johnson’s
will, his children are entitled to share his separate property. The primary
issue of this mediation will be the disposition of Mr. Johnson’s house.
In addition, the mediation may address a life insurance policy in the amount
of $10,000.00 which named Darla as the sole beneficiary.
Mr. Johnson’s Will leaves all of his community property to his wife, Meg. The Will leaves all of Mr. Johnson’s separate property to his children, Bill and Darla. In addition, the Will specifically gives Meg a life estate in his house, which reads “for her and our daughter, provided she pays the annual taxes and insurance while living there.” It should be noted that the house is the primary asset of the estate and is worth $240,000.00.
Under Washington law, the house is presumed to be Mr. Johnson’s
separate property. The house was acquired by Mr. Johnson before his marriage
to Meg. In fact, the outstanding mortgage was paid from life insurance proceeds
from his first wife’s death. Meg has made some allegation of the house
being a community property asset (and therefore passing to her under the
Will). This claim is unsupportable. In Washington, the character (community
vs. separate) is determined at the time of acquisition. It cannot be changed
into community property because of improvements during a subsequent marriage.
On the other hand, there is some support for the claim that Meg is entitled
to reimbursement for community expenditures made for improvements or remodeling.
The courts are split as to whether this reimbursement is available to a
spouse who lived in the house rent-free.
If Meg received a pure “life estate” in the technical legal
sense, she would be entitled to control possession of the house for the
duration of her life, even if she did not live there. Thus she could even
rent the house out to others, although any lease that extended beyond her
death would be voidable by Bill and Darla. A person with a true life estate
is responsible for taxes, insurance, and general maintenance of the property.
It is not clear whether the Will creates a true life estate, since it refers
to an apparent condition that the taxes and insurance be paid “while
living there”. The first issue is who owns the life estate (Meg only?
or Meg and Darla?). Second, is it a true life estate, or does the right
of possession terminate if they move, or even if they fail to pay the taxes
and insurance. There are many ambiguities in this clause that we hope can
be resolved at mediation.
Darla was listed as the sole beneficiary of a $10,000.00 life insurance policy.
It appears that the intent of Mr. Johnson was for these funds to be used for
Darla’s education. However, no trust was established for this purpose.
As a minor, Darla is not presently entitled to receive the funds. The general
rule is that these funds would be placed in a custodial account until she turns
18, at which time the funds and any earnings thereon will be distributed to
Darla without restriction. It
I would like input from members of Darla’s family as to whether they think
it would be in her best interests for Darla to receive such a large sum of money
at that age. Another issue to discuss would be who will act as the custodian?
Given the costs of higher education today, it is unlikely that $10,000.00 is
enough to pay for a 4-year degree.
Darla was devastated by her father’s death. Darla has taken the remainder
of this semester off from school (she is a high school freshman). She is currently
receiving grief counseling, which appears to be helping. However, even before
her father’s death, Darla was doing poorly in school. Although Darla may
not graduate with the rest of her classmates, the extra year in high school
may allow her to mature more. Darla will not be attending the mediation session.
It is uncertain whether college is in Darla’s future. Although it is early
in her high school career, Darla has not done well academically. It appears
the family is supportive and hopeful that she will attend college, they also
express some doubt whether she will do so. Perhaps the mediation will result
in a resolution that encourages Darla to challenge herself academically but
does not punish her for the realities of her intellectual and emotional state.
Thank you for assisting us with this mediation. Please keep the contents of
this memorandum confidential unless I specifically authorize you to disclose
a portion of its contents to another party. Please feel free to contact me if
you have any questions.
All contents © 2004 DRC of Yakima and Kittitas Counties. All rights reserved.