The Doctrine of Virtual Representation
Posted Friday, June 14, 2013 by John S. Palmer
Recently-passed changes to Washington’s statutes governing trusts and estates will take effect on July 28. Some of the changes modify the circumstances under which one person with an interest in a trust or estate may “virtually represent” other interest holders to resolve a question or dispute pertaining to the trust or estate. The rule is codified as RCW 11.96A.120 and is intended to make it easier to provide notice to all interested parties or obtain their consent in situations where it would otherwise be difficult to do so.
For example, where an interest has been given to persons who comprise a certain class upon the happening of a certain event (e.g., a trust share will pass to a person’s then-living children upon his or her death), the living persons who currently constitute the class may virtually represent potential future class members to resolve a question or dispute affecting their interest (i.e., the then-living children can join in an agreement resolving a dispute pertaining to the trust, and that agreement is binding on any class members born after the agreement is signed.)
Likewise, where an interest has been given to a living person, and the same interest, or a share in it, is to pass to his or her surviving spouse, surviving domestic partner or lineal descendants upon the happening of a future event, that person may virtually represent the surviving spouse, surviving domestic partner and lineal descendants in settling any question or dispute relating to that interest.
Among the changes that will take effect on July 28:
The two situations described above (present class members may virtually represent future class members, present interest holder may virtually represent spouse, domestic partner or issue) will only be permitted if there is no conflict of interest between the representative and the person(s) represented with regard to the particular question or dispute.
Virtual representation will be permitted in cases involving two successive classes (i.e., where an interest is to be given to a class of persons upon the happening of a future event, and the same interest or a share of the interest is to pass to another class of persons upon the happening of an additional future event). In that case, the living person(s) comprising the first class may virtually represent the person(s) who might take as part of the second class upon the happening of the additional future event, provided there is no conflict of interest.
One of the biggest impediments to settling a question or dispute involving a trust or estate often occurs when an interested party is a minor or incapacitated person, and their consent cannot be legally obtained. If a legal guardian has been appointed for that party, the guardian can act on their ward’s behalf. The changes taking effect on July 28 also include:
Specifically requiring any guardian acting on behalf of a minor or incapacitated party to comply with other applicable requirements of the guardianship statutes; for example, to help ensure any settlement is in a ward’s best interest, RCW 11.92.060 requires a guardian to obtain court permission before settling any claim by or against the ward.
Permitting a guardian of the person to represent and bind the ward if no guardian of the estate has been appointed.
Permitting a parent to represent and bind his or her minor or unborn children if a guardian for the children has not been appointed.
Unless otherwise represented, a minor, incapacitated, or unborn individual, or a person whose identity or location is unknown and not reasonably ascertainable, may be represented and bound by another person having a substantially identical interest with respect to the particular question or dispute, but only to the extent there is no conflict of interest between the representative and the person represented with regard to the particular question or dispute.
Finally, the Washington Attorney General will be permitted to virtually represent a charitable organization in certain situations with regard to any question or dispute involving a trust or estate in which the charity has an interest.
If you have any questions or would like to schedule an appointment, please call us at (425) 455-5513, toll free at (877) 455-5513, or info@palmerlegal.com.