In Re Irrevocable Trust of McKean

183 P.3d 317
CourtCourt of Appeals of Washington
DecidedApril 29, 2008
Docket36127-2-II
StatusPublished
Cited by39 cases

This text of 183 P.3d 317 (In Re Irrevocable Trust of McKean) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Irrevocable Trust of McKean, 183 P.3d 317 (Wash. Ct. App. 2008).

Opinion

183 P.3d 317 (2008)

In re the IRREVOCABLE TRUST OF Michael A. McKEAN, Appellant.

No. 36127-2-II.

Court of Appeals of Washington, Division 2.

April 29, 2008.

*319 John Patrick O'Connor, Attorney at Law, Tacoma, WA, for Appellant.

Robert Blake Nettleton, Neil, Nettleton & Neil, P.S., Robin H. Balsam, Attorney at Law, Tacoma, WA, for Respondent.

ARMSTRONG, J.

¶ 1 Michael A. McKean appeals the trial court's refusal to vacate its order appointing Commencement Bay Guardianship Services (Commencement Bay) as trustee of the Irrevocable Trust for Michael Allison McKean's Children and dismiss this action. A trial court in another action had appointed Commencement Bay trustee, but we reversed that order after Commencement Bay initiated this litigation. Because Commencement Bay was acting as de facto trustee from the time of its original appointment, we affirm.

FACTS

¶ 2 Michael A. McKean has two daughters, Michelle McKean, born in 1989, and Morgan McKean, born in 1996. Laura McKean, Michael's second wife, is Michelle's mother; Connie McKean, Michael's third wife, is Morgan's mother.

¶ 3 In 1992, Michael created the Irrevocable Trust for Michael Allison McKean's Children for the benefit of Michelle and his future children. Michael funded the Trust in part with 100 shares of stock in Northwest Community Housing Corporation, a corporation Michael had incorporated in 1988. Michael also transferred to the Trust 20 percent of his "then owned" equity in 66 limited partnerships, which he valued at $275,000. Clerk's Papers (CP) at 787. The Trust contained a sub-trust for the sole benefit of Michelle, Michael's only child at the time he settled the trust. Michael funded the sub-trust with real property managed as a rental.

¶ 4 Michael named his close friend, Gale Dahlstrom, as the Trust's trustee. Although Dahlstrom signed the Trust documents as trustee, Michael led Dahlstrom to believe that he would have no active management responsibilities unless Michael passed away or was unable to manage the assets himself. Neither Michael nor Dahlstrom followed the formalities of trust management and administration after Michael created the Trust. Nobody filed trust tax returns for the years 1993 through 1997, different tax identification numbers were used for the Trust, and Michael commingled trust assets with non-trust assets.

¶ 5 In 1996, the federal government named Michael as a defendant in a civil lawsuit and began a criminal investigation of his activities related to the limited partnerships. When Michael learned of the lawsuit and the investigation, he began to transfer assets out of his name for the purpose of hiding them from the federal government. This included transferring additional assets to the Trust.

¶ 6 In 1998, Michael filed an action to dissolve his marriage to Connie.[1] The trial court in that action dissolved the marriage in November 2000. The dissolution court found that both Michael and Connie had abused the Trust, that Michael controlled the trustees, and that it should appoint a corporate trustee for the Trust. Michael appealed the dissolution order to this court.

¶ 7 In early 2000, Michael opened a bank account for the sub-trust and Dahlstrom began receiving account statements as the trustee. Dahlstrom became concerned and, in August 2000, he signed a resignation of trustee, which he personally delivered to Michael. Michael did not inform Connie or the bank of Dahlstrom's resignation. In March 2002, Michael's sister, Shannon Keene, filed tax returns for the Trust for the years 1998 through 2000, signing the returns as the trustee.

¶ 8 In December 2001, while the appeal of the dissolution decree was pending, the dissolution court appointed Commencement Bay, a certified professional guardianship agency, as trustee of the Trust. On January *320 4, 2002, Commencement Bay initiated this action by filing a petition for instructions. The trial court directed Commencement Bay to serve a summons on Michael, Connie, Dahlstrom, and Keene under the Trust and Estate Dispute Resolution Act, chapter 11.96A RCW, which Commencement Bay did.

¶ 9 On February 1, 2002, we reversed and vacated the dissolution court's decision to appoint a corporate trustee for the Trust, holding that the dissolution court did not have personal jurisdiction over the trustees. In re Marriage of McKean, 110 Wash.App. 191, 195-96, 38 P.3d 1053 (2002).

¶ 10 Shortly after we issued our opinion in the dissolution action, Commencement Bay petitioned the trial court in this action for an order appointing it trustee of the Trust or, in the alternative, dismissing the action and relieving Commencement Bay of its responsibilities. Commencement Bay asserted that, after the dismissal in the dissolution action, another order appointing it as trustee was necessary to protect the children's assets. Michael also moved for an order dismissing Commencement Bay from this case.

¶ 11 On March 12, 2002, the trial court appointed Commencement Bay trustee of the Trust as of January 4, 2002, nunc pro tunc. The trial court found that the order was necessary to preserve the children's assets and to protect them from waste, theft, and fraud. It also found that entry of the order nunc pro tunc was necessary to protect the children's rights and that it did not prejudice Michael's rights.[2]

¶ 12 Before this case proceeded to trial in 2006, Michael again moved to vacate the order appointing Commencement Bay as the Trust's trustee and all other orders in this case, and to dismiss the case. The trial court denied the motion, ruling that it had "the inherent power, duty and jurisdiction to protect children who are beneficiaries of trusts." CP at 696.

¶ 13 After a bench trial, the trial court found that Michael had disavowed his gift of 100 shares of Northwest Community Housing stock to the Trust to prevent Commencement Bay from managing funds that would be distributed to the Trust from Northwest Community Housing. McKean had made inconsistent statements in other proceedings about the Trust's ownership of Northwest Community Housing stock. The trial court also found that if Commencement Bay had not been appointed trustee, McKean would not have denied the validity of the gift of Northwest Community Housing stock to the Trust. The trial court concluded that the Trust owned 100 shares of Northwest Community Housing stock and ordered that 20 percent of any funds distributed to Northwest Community Housing be transferred to the Trust.

¶ 14 Michael appeals (1) the trial court's denial of his motion to vacate the order appointing Commencement Bay as trustee and to dismiss the case and (2) the order requiring distribution of 20 percent of all funds Northwest Community Housing receives to the Trust.

ANALYSIS

I. Commencement Bay's Standing

¶ 15 Michael argues that the trial court lacked jurisdiction over this action because, once we vacated the dissolution court's order requiring appointment of a corporate trustee, the dissolution court's appointment of Commencement Bay became void and Commencement Bay did not have standing to bring the petition in this action.

¶ 16 An order or judgment is void if the court that issued it lacked jurisdiction over the parties or subject matter of the *321 dispute.[3] Whether a trial court has jurisdiction is a question of law, which we review de novo. Crosby v. Spokane County, 137 Wash.2d 296, 301, 971 P.2d 32

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Cite This Page — Counsel Stack

Bluebook (online)
183 P.3d 317, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-irrevocable-trust-of-mckean-washctapp-2008.