How to Avoid PROBATE! by NORMAN F

How To AvOID PROBATE! by NORMAN F. DACEY New York: Crown Publishers, Inc. 1965. p. 361. $4.95

Charging across the landscape of the best seller list comes Ajax, the White Knight, approaching three scruffy and grubby children whose first names are all Probate and whose last names are Delay, Expense and Publicity. Levelling the lance of Living Trust at these deplorable urchins, he thunders by, and lo! they are white as snow. The horse named Property has passed quickly, bearing its rider securely clad in Mutual Fund to an Object of Bounty. The vision fades. After the giddy exhilaration has passed, prompted in part by the use of the exclamation mark in the title of the vision, How to Avoid Probate!, one may come to wonder if the children so magically transformed really came that clean and whether the White Knight is all so pure. Norman F. Dacey superficially has mounted a polemical vendetta against lawyers, judges, probate law and legislators. The basic proposition which' the book seeks to establish is that lawyers feed as para- siteson a dead man's property through the existence and maintenance of an unconscionable system of probate administration, amounting to, in his words, "a high-class racket." The proposition is established emotionally by use of such high-charged adjectives and phrases as "hocus-pocus," "rigmarole," "weird and wordy," "insidious," "logi- cal legerdemain," "streamlined voodoo," "chromium-plated theol- ogy" and "mumbo jumbo," resulting in the conclusion by:the author that "the vaunted majesty of the Law is a hoax." The proposition thus established, however questionably, is then put to further use in two silly syllogisms. The first relates to the judges and courts. Since lawyers are engaged in a parasitical high-class racket, and because "a judge is simply a lawyer who knew a governor," therefore judges are engaged in a racket. Any remedy is impossible in the author's view because relief depends on legislative reform and the second syllogism expectedly is that since lawyers are engaged in this racket and because many legislatures have a substantial composition of lawyers, legislatures are also engaged in the racket. GONZAGA LAW REVIEW [Vol. 2

Indeed, of all those functionaries which may become involved in the administration of a decedent's estate, none escapes unscathed. Some amnesty is granted insurance salesmen, perhaps representing a mellowing since the author's publication in 1962 of his first book, called What's Wrong with Your Life Insurance! "Are you buying life insurance-or financial disaster?" The amnesty comes on two conditions: first, that the insurance be term insurance and, second, that its proceeds be used to buy mutual funds on the death of the decedent. Conditional amnesty is also granted the trust departments of commercial banks, provided they are willing to accept trusts for the purpose of receiving and paying out money only, the trust prin- cipal to be kept solely in mutual funds and its investment there to be handled by the managers of the mutual fund whose capabilities are to be accepted on faith. Thus, under this excoriating wrapper of condemning the bench, the bar and the probate law lies the real package-the sale of mutual funds implemented and assured on the establishment by the purchaser of a "Dacey trust," and a "Dacey will." The purchaser sets up a revocable inter vivos trust naming himself as trustee and a "co- operating" bank as successor trustee. The corpus of the trust is com- posed of substantially all of the settlor's intangible personal property and insurance policies. On the death of the settlor, the insurance proceeds are receivable by the successor trustee, and used to purchase shares in a named mutual fund from a named dealer in that fund. As observed by the supreme court of Connecticut in Grievance Committee of the Bar of Fairfield County v. Dacey, 154 Conn. 129, 222 A.2d 339, 347 (1966): Itis true that the Dacey Trust arrangement was an excellent method of selling shares in mutual funds. Indeed, the commissions involved on the future sales of Wellington Fund shares to the trustees may well run to several hundred thousand dollars. But the defendant cannot practice law as a method of selling mutual funds, any more than the banks, in the case he relies upon, could draft wills and trusts to augment the profits of their trust departments. The revocable living trust, billed by Mr. Dacey as a "wonder drug," is, of course, recognized as an essential tool by the practicing lawyer. It has, in addition to the advantages of privacy and acceler- ated transition from the settlor's ownership to that of his beneficiaries on his death, a number of other desirable features. In a mobile so- ciety, it can place the settlor's property in a desirable jurisdiction. It may forestall possible attacks on the disposition the settlor desires. It will avoid interruption of management of property administration. March, 19671 HOW TO AVOID PROBATE

If designed as a convertible living trust, to become irrevocable upon the incompetency of the settlor, it may avoid the necessity of an ad- judication of incompetency and provide for the continuation of the management of the property and application of its income for his benefit during a period of disability of the settlor. But "wonder drugs" are dispensed only upon prescription by competent physicians, and revocable trusts likewise should be used and drawn with advice of counsel. Some parallels to the great krebiozen furor in the medical field suggest themselves as Dacey proceeds to assert that lawyers will not recommend the use of a revocable inter vivos trust because it keeps the property of the trust from going through probate administration and from becoming a part of the base upon which attorney's fees would otherwise be imposed. While it would be relatively easy to brand the criticism of the legal profession and the law contained in this bellicose paperback as extravagant and irresponsible, candor requires acknowledgement that the probate procedure in many jurisdictions is archaic, ponderous and excessively complex; that in some jurisdictions gross abuses have occurred and continue to occur, due largely to the unsavory practices of political patronage; and that there are, regrettably, among us those who make their own interests, rather than those of their clients, paramount. Action can, has been, and is being taken to correct such conditions. In our own state this has been particularly apparent. A new Probate Code was enacted by the 1965 session of the Washington legislature which did much to modernize and simplify routine probate administration. The political patronage of the appraiser system in Washington was largely elimi- nated by the same legislature. An integrated bar association in this state makes discipline of its members far more effective than may be the case in states not having an integrated bar. Criticism of the bar, the bench and the law, of course, is not new. It is, however, the misfortune of our age that we have been denied the literary delights of that kind of criticism of which Charles Dickens was capable when he gored the ox of the English Courts of Chancery in Bleak House. The raw afternoon is rawest, and the dense fog is densest, and the muddy streets are muddiest, near that leaden-headed old obstruction, appropriate ornament for the threshold of a leaden-headed old cor- poration-Temple Bar. And hard by Temple Bar, in Lincoln's Inn Hall, at the very heart of the fog, sits the Lord High Chancellor in his High Court of Chancery. Never can there come fog too thick, never can there come mud and mire too deep, to assort with the groping and floundering condition GONZAGA LAW REVIEW (Vol. 2

which this High Court of Chancery, most pestilent of hoary sinners, holds, this day, in the sight of heaven and earth. No such literary aspiration moves author Dacey. In Bleak House and in the High Court of Chancery Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated, that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two Chancery lawyers can talk about it for five min- utes, without coming to total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce, without knowing how or why; whole families have inherited legendary hatreds with the suit. Dickens' purpose was to criticize, not condemn, and thereby a counterpoint was added to his criticism. The heirs of Jarndyce themselves, by their greedy and avaricious contentions and disputes, wrought their own destruction. Any valid criticism of probate law and administration must recognize this factor of human nature. As heirs will fight, the court, of necessity, provides the arena. It does not start the dispute, but seeks to resolve it in orderly fashion. As decedents will be unduly influenced, or will treat the natural objects of their bounty unfairly, the court, of necessity, seeks to rectify. Nor is the 'contentiousness of litigating heirs the only factor which must be recognized. Between the benign decedent and his heirs in sweet accord stand the rights and claims of the sovereign, to tax, and of third parties to be paid, to have performance, or to be compen- sated. The factors involving heirs and those' involving third parties are: not even considered by Mr. Dacey except insofar as he would inextricably involve them as a part of the "racket." He does ack- nowledge the existence Of tax problems on the death of a decedent, but being satisfied with ascribing all fault of delay in probate administration to lawyers and the courts and the probate law, apparently sees no need to point out the delays incident to their determination and settlement, which are no more avoided than the taxes themselves by the use of the revocable inter vivos trust. When one seeks to condemn, rather than criticize, any advantage in the thing sought to be condemned is ignored. Thus, the distinct advantage to the decedent's estate and to his heirs of the operation of the non-claim statute in a probate administration is not mentioned. It affords, of course, both certainty and protection which may be of inestimable value by settling an estate to its beneficiaries without threat of subjection to later challenge. March, 1967] HOW TO AVOID PROBATE

The author does recognize, however, that not all assets of a decedent may be placed under the aegis of the revocable trust and that a will is therefore still necessary. A form for this is also provided in the text and for purposes in Washington, it should be pointed out that it does not differentiate between, or deal with, community or separate property; it does not waive a bond requirement; and, it does not call into play that most liberal of probate administrations, the non-intervention estate. It does provide that the assets subject to probate administration are to "pour over" into the "Dacey Trust" and therein be promptly used to purchase the named mutual fund from the named dealer. As observed in Committee v. Dacey, 222 A.2d at 343: Although it did not clearly appear that Dacey ever charged for the preparation of a trust or will, as such, he did provide in the will form that upon the death of the testator the entire estate, except for tangi- ble personal property, should go into the corpus of the trust and that substantially the entire corpus should be invested in shares of the Wellington Fund which should be purchased from Dacey. Under his contract with the Wellington Fund, Dacey received a 6 per cent commission on all sales of shares of the Wellington Fund. Thus, as a direct consequence of his preparation of the Dacey trust arrangement, Dacey virtually assured himself of what amounted to a 6 per cent sales commission on almost the entire assets of each estate. Com- pensation may have been frequently deferred, but it was substantial when received. Just how clean, then, did those grubby urchins, Probate Delay, Probate Expense and Probate Publicity, become? As to Probate Delay, the beneficiary of the inter vivos trust did, of course, obtain immediate possession or enjoyment of the decedent's property-but inheritance and death taxes still remain to be settled over a protracted period and without the benefit of a coor- dinating personal representative to handle the problem. The creditors of, the contracting parties with, and the persons injured by the decedent during his lifetime, or coincident with his death, may seek satisfaction of their claims in full from the assets of the trust for the normal period permitted by the statute of limitations, without either being limited by the salutory provision from the beneficiary's standpoint of the non-claim statute or being limited to a ratable share with respect to the decedent's entire estate. As to Probate Expense, it need hardly tax the imagination to compare the "shrinkage" effect on the estate of the substitution of the lawyer's fee with the six per cent commission of the nominated mutual fund dealer. Where the assets in the form of mutual funds GONZAGA LAW REVIEW [Vol. 2 GONZAGA LAW REVIEW IVol. 2 have been placed in the inter vivos trust prior to death the "fee" has been prepaid. Where insurance proceeds are payable to the trust and to be invested in mutual funds, the "fee" is imposed where in most instances no attorney's fee would be involved anyway. Where assets remain which require probate administration, the "fee" is in addition to the attorney's fee. And none of these "fees" is a deductible item, as is that of the attorney, to reduce the impact upon the estate. As to Probate Publicity, it appears obvious that the notice in the newspaper that so-and-so has died and that his "estate is in excess of $100,000" has been avoided. Is the White Knight then all so pure? The lawyers, the courts and the probate law have not been criticized by Mr. Dacey, imply- ing detachment and circumspection, but have been condemned as a means to another end. Our "motives" have been damned to screen his own. As the Supreme Court of Connecticut observed in Committee v. Dacey, 222 A.2d at 351: Indeed, the public may well be in greater need of protection from the unauthorized practice of law where it seems to be done without charge than where a charge is openly made for the services. In the former situation, the public, through natural cupidity, are the more readily attracted to something which appears to be a 'giveaway' project or a chance to obtain 'something for nothing.' Charles Dickens' criticism closed on a note of high drama when Allen Woodcourt, whose wife, Esther, was one of the heirs of Jarn- dyce, came upon Lincoln's Inn to find a laughing crowd leaving the Chancery Courtroom and finding his barrister, Mr. Kenge, heard, 'You are to reflect, Mr. Woodcourt,' observed Mr. Kenge, using his silver trowel persuasively and smoothingly, 'that this has been a great Cause, that this has been a protracted Cause, that this has been a complex Cause. Jarndyce and Jarndyce has been termed, not inaptly, a Monument of Chancery practice.' 'And Patience has set upon it a long time,' said Allen. 'Very well indeed, sir,' returned Mr. Kenge, with a certain condes- cending laugh he had. 'Very well! You are further to reflect, Mr. Woodcourt,' becoming dignified almost to severity, 'that on the numerous difficulties, contingencies, masterly fictions, and forms of procedure in this great Cause, there has been expended study, ability, eloquence, knowledge, intellect, Mr. Woodcourt-high intellect. For many years, the-a-I would say the flower of the Bar, and the-a- I would presume to add, the matured autumnal fruits of the Wool- sack-have been lavished upon Jarndyce and Jarndyce. If the public have the benefit, and if the country have the adornment of this great Grasp, it must be paid for in money or money's worth, sir.' March, 19671 HOW TO AVOID PROBATE 145

'Mr. Kenge,' said Allen, appearing enlightened all in a moment, 'Excuse me; our time presses. Do I understand that the whole estate is found to have been absorbed in costs?' Norman Dacey's condemnation closes not in drama but merely in pique, with what may well be regarded as one of the more monu- mental non sequiturs: "Probate [cost] is something to be avoided at all costs." One cannot but wonder, now that Dacey's book has been written "freeing Americans from the bondage of the iniquitous probate system," when one will be written to help them distinguish between wolves and sheep. GEORGE T. SHIELDS* *Member of the State Bar of Washington. Copyright C 1967 all rights reserved by George T. Shields.