Opinion
No. 31661-7-II
Filed: March 15, 2005
Appeal from Superior Court of Pierce County. Docket No. 02-4-00243-1. Judgment or order under review. Date filed: 03/19/2004. Judge signing: Hon. Beverly. G. Grant.
Counsel for Appellant(s), John Patrick O'Connor, Attorney at Law, 2115 N 30th St Ste 201, Tacoma, WA 98403-3397.
Counsel for Respondent(s), Robin H. Balsam, Attorney at Law, 609 Tacoma Ave S, Tacoma, WA 98402-2322.
Michael McKean appeals an order appointing a limited guardian to monitor trusts benefiting his children, Michelle and Morgan McKean. Michael argues that because the children are only trust beneficiaries, they do not own assets subject to the court's jurisdiction; he also argues that the court failed to find that a guardian is either reasonable or necessary. We affirm.
FACTS
In 1998, Michael McKean pleaded guilty to federal fraud charges arising from his construction of federally subsidized housing. While he was incarcerated, Michael's wife, Connie, spent significant amounts of money, often without telling him. Connie and Michael divorced in 2000.
In its oral ruling in the dissolution, the court commented extensively on Michael and Connie's lack of credibility and trustworthiness, citing Michael's convictions for crimes of dishonesty, his authorship of a document on how to hide money, and Connie's 'destruction and concealment of documents and assets.' Clerk's Papers (CP) at 422. The court also found that at least $135,000 in bearer bonds remained unaccounted for.
The Pierce County Superior Court appointed Commencement Bay Guardianship Services (CBGS) as the corporate trustee for trusts benefiting Morgan and Michelle McKean. It did so 'because both husband and wife have not honored the trust status in the past and have treated these assets to some extent as their individual money and likely would do so in the future.' CP at 425. The order required Michael and Connie to turn over any assets belonging to any trusts in favor of Michelle and Morgan.
On February 1, 2002, we reversed the order appointing a trustee because the superior court lacked jurisdiction over the trust property and the trustees. In re Marriage of McKean, 110 Wn. App. 191, 192, 38 P.3d 1053 (2002). But the superior court appointed CBGS as successor trustee in the related trust proceeding on March 12. In that proceeding, the court found that $15,000 had been moved from the children's custodial accounts to an investment account in Colorado and that CBGS had alleged that $70,000 appeared to be missing from a Columbia State Bank account of which Morgan was the beneficiary.
On February 13, CBGS petitioned for appointment of a limited guardian for Michelle and Morgan's estates. A superior court commissioner granted the petition, noting that:
We know that there are before the Court at least no accountings from the Trustees, no accountings from Mr. McKean for these properties, no tax returns, no documents at all have been produced to in any way indicate that the assets of the Trust held for the minors have ever been properly managed or maintained. Again we have evidence that they have not been, in that the Trustee never managed them, and are finding unchallenged that Ms. McKean misappropriated funds.
Report of Proceedings (RP) (Feb. 13, 2002) at 12-13.
The court appointed a guardian ad litem (GAL) to prepare a report regarding the appointment of a limited guardian for the estates. The GAL identified the following trusts: (1) Irrevocable Living Trust for Michael McKean's Children, (2) Michelle McKean Separate Trust, (3) Michelle McKean Dependency Trust, (4) Morgan McKean Dependency Trust, and (5) the Gun Trust.
This trust held a gun collection valued between $80,000 and $100,000 that Michael could not legally possess.
The GAL found that McKean had pleaded guilty to the federal crimes discussed above, had been disbarred in Washington in 2001, and was presently incarcerated for alleged parole violations. The GAL recommended a limited guardian because the trustee, Michael's sister Shannon Keene, did not appear to be exercising independent management over the trust assets; despite her intentions, Michael affected her decision making. In the GAL's opinion, a limited guardian would make the trustee accountable as a fiduciary. No action had been taken to trace funds Connie appeared to have dissipated, and questions remained about Morgan's $20,000 worth of certificates of deposit and an unspecified number of savings bonds. The GAL also identified pending civil litigation that could increase or decrease the trusts' values.
On March 19, 2004, the court appointed Guardianship Services of the South Sound (GSSS) as limited guardian for the estates of Michelle and Morgan. The court ordered GSSS to manage the children's non-trust assets and monitor their beneficial interests in trust assets.
The respondent, Commencement Bay Guardianship Services (CBGS), is the successor trustee.
ANALYSIS
Michael first argues that appointing a limited guardian was error because the court did not make a finding that one was necessary and reasonable. CBGS responds that substantial evidence supports the finding that a limited guardian was necessary and that no specific finding of reasonableness is required.
Any person or entity may petition for appointment of a limited guardian. RCW 11.88.030(1). The petition must state the reasons why the person is seeking an appointment, the petitioner's interest in the appointment, and whether the appointment is sought as a guardian or limited guardian of the person, the estate, or both. RCW 11.88.030(1)(h). 'Implicit within this provision is the requirement that before a court will appoint a guardian it must be shown that such appointment is necessary and reasonable.' In re Guardianship of Harp, 6 Wn. App. 701, 705, 495 P.2d 1059 (1972) (citing 39 Am. Jr. 2d, Guardianship and Ward, sec. 19 (1968)).
When a court appoints a limited guardian, it must base its order on 'findings as to the capacities, condition, and needs of the alleged incapacitated person.' RCW 11.88.095(1). And the order appointing the guardian must contain these findings. RCW 11.88.095(2)(a). But the statute does not require a finding that the appointment is necessary and reasonable. See RCW 11.88.095. The court found that '[t]he guardianship of the estate is necessary, as there are no appropriate alternatives to the appointment of the guardian of the estate in this matter.' CP at 340.
This finding, together with the undisputed evidence that Michael and Connie had apparently dissipated the children's assets, fully support a finding that the limited guardianship is both reasonable and necessary.
Michael next argues that the children had no assets subject to the court's jurisdiction and a guardian's administration. Specifically, Michael reasons that because legal title to any possible guardianship property is held by the trustee, the children own no property subject to guardianship. Michael relies on Studebaker v. Hogen, 104 Wash. 265, 176 P. 339 (1918). There, the court reversed the appointment of a guardian for the decedent's minor children's estates because the children, who were the beneficiaries of the decedent's testamentary trust, had no estate to administer. Studebaker, 104 Wash. at 267. It explained: The court erred, however, in making the appointment of a guardian of their estates, for the reason that the record discloses no estates in the minors which permits the appointment of a guardian; the law being that a guardian of an estate is not to be appointed until it is shown that the prospective ward 'has property in the county needing the care and attention of a guardian.' By his will, Hogen left his property, not to his children, but to the appellants, as trustees, and what remains of the trust property after the terms of the trust have been fulfilled will not come into the possession of the children, by the terms of the will, until after they have become of age.
Studebaker, 104 Wash. at 267.
Studebaker is not controlling for several reasons. First, CBGS presented evidence that the children owned some property not in trust. Michael and Connie had established several 'custodial accounts' for the children. In addition, the Studebaker court was not faced with misappropriation and mismanagement of the trust assets. Here, in contrast, the evidence demonstrated that Michael and Connie had manipulated the trust assets for their own purposes and that one of the trustees, Michael's sister, was subject to Michael's control. Finally, the independent corporate trustee had no access to assets not in its trusts. And because the corporate trustee could not monitor these assets, a guardian was necessary to protect the children's interests. See Studebaker, 104 Wash. at 265-67.
Finally, CBGS requests attorney fees and costs. RAP 18.1(a) allows recovery of attorney fees and costs on appeal if applicable law grants the right. Under RCW 11.96A.150, the court may assess attorney fees and costs against any party to the trust or guardianship proceeding. We award the guardianship its attorney fees and costs on appeal against Michael individually in an amount to be set by a commissioner of this court.
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HOUGHTON, J. and BRIDGEWATER, J., Concur.