Below is a sample Revocable Living Trust:
DOE FAMILY REVOCABLE LIVING TRUST
On 02-17-2020, JANE DOE (BORN 07/19/1971) and JOHN DOE (BORN 02-11-1979), as Trustors and Trustees, pursuant to RCW (Revised Code of Washington) § 11.98.008, made, executed, and declared a Revocable Living (Inter Vivos) Trust titled the DOE FAMILY REVOCABLE LIVING TRUST (DATED 02-17-2020) (Abbreviated: “DOE FAMILY TRUST”) (the “Trust”). The Trust is executed in, and governed by, the laws of the State of Washington pursuant to RCW § 11.98.005. Therefore, the situs of the Trust is Washington State.
The Trust is effective on the date signed. The Trust only applies to property within the United States. The first page of the Trust shall be a Certificate of Trust. It can be given to third parties, pursuant to RCW § 11.98.075, to protect privacy by providing key provisions without revealing gifts to beneficiaries:
- JANE DOE (BORN 07/19/1971) and JOHN DOE (BORN 02-11-1979) are married as of 02-17-2020. The Trustors have the following children:
The Trust Taxpayer Identification Number (TIN) to be listed on any beneficiary designations is the Social Security Number of JANE DOE and/or JOHN DOE depending upon who owns the account. The Trust contains no tax planning or asset protection. Tax return filing does not change.
The Trustors expressly revoke all prior Trusts that they may have made.
The Trustors affirmatively state that this Trust has not been revoked or amended such that any statements in this Certificate are incorrect.
Title to all Trust assets shall be taken in the names of JANE DOE and JOHN DOE, Trustees of THE DOE FAMILY REVOCABLE LIVING TRUST, as community property with right of survivorship.
JANE DOE and JOHN DOE jointly have the power at any time to amend or revoke this Trust in writing.
The Trustors can independently and individually perform all other actions related to the Trust.
- If JANE DOE and JOHN DOE are, at any time, unwilling or unable to serve as Trustees, whether by death or otherwise, then the Successor Trustee shall be:
BOB JONES, and then SALLY JOHNSON, IN THAT ORDER.
- The Successor Trustee shall have all of the powers originally given to JANE DOE and JOHN DOE pursuant to RCW § 11.98.070 without any restrictions in dealing with Trust assets as the Trustors have directed. No bond shall be required of any Successor Trustee. Compensation is permitted only for Successor Trustees who are not beneficiaries. The Successor Trustee shall not be liable for acting, or failing to act, so long as the Successor Trustee’s conduct is consistent with principles of loyalty (RCW § 11.98.180) and good faith (RCW § 11.98.010).
Article I — The Probate and Non-Probate Estate
Avoiding Probate. It is best to avoid the cost, time, and public disclosure to probate the Estate of a deceased person if possible. Probate is the Court supervised process for publicly appointing an Executor of the Estate to file an inventory, pay taxes, creditors, and beneficiaries. Doing so is referred to as Estate administration.
This Trust contains instructions for the Successor Trustee regarding Trust administration, as well as an explanation of options, and the context in which Wills and Trusts operate. The purpose is so that the Trustors, as well as the Successor Trustees, may make better decisions.
The way to avoid Court involvement is to increase the number of non-probate assets, that is assets that pass to beneficiaries in other ways which do not require an Executor. The Executor must be a resident of King County. These ways include: transfer of death deeds for real estate, beneficiary designations for 401(k)s, IRAs, or life insurance policies, payable on death designations, and revocable living trusts. The Successor Trustee of the Trust can live anywhere in the U.S..
The broader purpose of estate planning is to promote family harmony through communication about difficult subjects, and to make your family more resilient and less likely to have disputes. One of the best ways to decrease disputes is to think about fairness. Estate planning is ultimately about people and how they feel and get along, not just property.
Avoiding Probate and Washington State Estate Tax with a Transfer on Death Deed for Real Estate. The most expensive asset to probate is typically the home of the deceased. A transfer on death deed avoids probate and eliminates that cost. The transfer of property pursuant to a transfer on death deed will be exempt from Washington estate tax, Federal Estate Tax, and real estate transfer tax, provided that a certified copy of the death certificate of the deceased is recorded along with an Excise Tax Affidavit to transfer title to beneficiaries. Beneficiaries take the property subject to liens, taxes, liabilities, and other encumbrances to which the decedent’s Estate is subject. The beneficiary receives a step-up in basis to the date-of-death value. The statute was created in 2014. Prior to that, quitclaiming to a revocable living trust was used to avoid just probate, but not estate tax.
A transfer on death deed creates no present interest in the beneficiary to the property. A transfer on death deed does not affect the owner’s right to transfer or encumber the property. The Deed is moot if the property is sold.
Avoiding Probate with Beneficiary Designations. The Trust may be named as contingent beneficiary after your spouse on life insurance, 401(k) accounts, IRA accounts, or any account for which a beneficiary has been named. The Successor Trustee will then claim directly from the custodian of the asset without the need for involvement by the Personal Representative (Executor) of the Estate.
Elections Under Retirement Plans. INCOME FROM INHERITED IRAS AND 401(K)’S IS TAXABLE. CONSULT A CPA. Successor Trustees shall have the power to elect, pursuant to the terms of any employee benefit plan, individual retirement plan, or insurance contract, the mode of distribution of the proceeds thereof (including, but not limited to, taking an immediate distribution (worst choice), a distribution over 5 years (better), or an inherited retirement account allowing distributions over 10 years (best)).
The custodian of any retirement account shall be able to “look through” the Trust to the named beneficiaries. The required minimum distributions (RMD) required beginning date (RBD), currently 72. Failure to take RMD results in an IRS penalty of 50% of the amount not taken on time. Beneficiaries shall be allowed the maximum time to take distributions to give beneficiaries tax deferred growth and deferred taxes. The Successor Trustee shall have the right to amend this Trust to comply with any regulations to give effect to the Trustors’ wishes. Distributions from retirement accounts can start at 59-1/2 without penalty.
Holding Real Property as Joint Tenants With Right of Survivorship. Giving an interest in real estate to an adult child for example, will avoid probate, but may have other unintended consequences if the adult child files for bankruptcy, goes through divorce, or is just unscrupulous. Issues regarding the 5-year minimum Medicaid reach back period may also arise. There is no step up in basis for gifts during life as there is for gifts after death.
Payable on Death Accounts. Some accounts allow a Payable on Death designation that you can use to make the account a non-probate asset creating liquidity for the Estate by providing faster access to funds. The significance of doing so is that the funds are not subject to probate or creditor claims.
No Asset Protection or Tax Planning. The Trust provides no asset protection for JANE DOE and JOHN DOE against any creditor claims, and includes no tax planning regarding the federal estate tax or Washington estate tax. Tax planning is not covered by legal insurance plans, and involves additional cost, risk, administrative burden, and specialized legal and accounting services.
The Washington estate tax filing threshold and exclusion amount in 2020 is $2.193 million, with a rate starting at 10% and a top rate of 20% (the highest in the nation). The reason to be aware of this is so that your estate does not pay in taxes what your beneficiaries could have used to benefit themselves.
Prior to 1981, Washington had an inheritance tax in which the beneficiaries paid the tax. Since then, the date-of-death value of the estate (minus recorded transfer on death deed real property) is subject to the tax, not the beneficiaries.
Washington state has no gift tax. This is provided for informational purposes only. Verify exemptions, tax rates, and filing requirements for your situation with a CPA.
Planned Giving Over Your Lifetime. In 2020, the federal lifetime unified exclusion amount for estate tax and gift tax is $11.58 million per person ($23.16 million per couple), with a top rate of 40%. The federal annual gift tax exemption remains at $15,000. File IRS Form 709 if you give more than this to anyone other than your spouse in a year. Tuition or medical expenses you pay for someone to a third party are not considered gifts for IRS purposes. Gifts to charities and churches do not count against the exemption amount.
Since the Federal exemption amount for lifetime gifts is so high, you can give generously throughout your life. This can be done creatively by paying off mortgages, student loans, car loans, or credit card debt; funding Roth IRA or other retirement accounts, or giving to income producing investments for the benefit of children, grandchildren and great-grandchildren.
Charitable Giving. Gifts to charity do not count against the Federal Exclusion. Land Trusts or Land Conservancies are ways of protecting and conserving land as well as obtaining a tax deduction. A Charitable Remainder Unitrust (CRUT) is a way to get lifetime income, a charitable donation for the gift, and asset protection.
Crummey Trusts. A trust used by parents to shelter children’s gifts in a protected fund taking advantage of gift tax exclusion and limiting beneficiaries access to funds.
Bypass Trusts. A Credit Shelter Trust (also called an A/B, A/B/C or Bypass Trust) doubles the Washington State exemption for married people to $4.386 million. It is additional language in your Trust and Wills which is an additonal charge to prepare, and requires professional assistance after the first spouse passes to avoid mistakes which could trigger tax.
Qualified Terminable Interest Property (QTIP). Recognized only since 2019, an irrevocable designation by a surviving spouse regarding income producing property in order to defer both Federal and State Estate Taxes.
Irrevocable Trusts. Irrevocable asset protection trusts or a charitable remainder trusts are expensive. You usually cannot get the principal back once it is put into such Trusts, just a set amount of income. You can protect multiple generations of your family from estate tax as well as from the financial affects of divorce, bankruptcy, or addiction.
Grantor Retained Income Trust (GRIT). An irrevocable trust for a specified period during which income is earned after which assets are passed to beneficiaries excluded from the Federal Estate Tax calculation.
Grantor Retained Annuity Trust (GRAT). An irrecoable trust for a specified period during which income is earned after which assets return the Grantor (if living) tax free.
Article II — The Revocable Living Trust Estate
Trust Estate Contents and Funding the Trust.The Trustors, JANE DOE and JOHN DOE, hereby set aside, assign and cause the transfer of all of their non-titled property to the Trust as well as all future non-titled property acquired by the Trustors. Therefore, the Trust is funded with non-titled property immediately upon signing. Funding the Trust with titled property requires changing third party records. For example, the member interest in an LLC can be retitled in your name as Trustee of your Trust as can bank or investment accounts. The Trustors’ Wills leave all property to each other first, and then to the Trust. Wills used in conjunction with Trusts are often referred to as “pour-over” Wills because they fund the Trust.
The Trustors may list property on “Schedule A” for convenience of identification by Successor Trustees, but failure to schedule property shall have no effect on its character as Trust Property. It is not necessary to title any property in the name of the Trust during your lifetime, unless you wish to do so because your Will is a “pour-over” of everything to the Trust not already in the Trust that has no other way of passing, such as a beneficiary designation.
Three parts to estate planning. Documents for Third Parties. Personal Documentation. Communication. It is useful to think of your Trust and all estate planning documents as giving third parties such as Courts, banks, and hospitals the order of your representatives and the scope of their discretion. It is the documentation of your assets, debts, wishes and instructions unique to you and the communication to, and relationships with, your agents that determine effectiveness.
Trust Purpose.This Revocable Living Trust is meant to be used to accomplish objectives that cannot be accomplished by probating the Wills of JANE DOE and JOHN DOE without a Trust. These objectives fall into the following general categories:
- caring for young people by extending gifts over time (to avoid disinheritance, especially in blended families);
- caring for elderly, disabled, incapacitated, addicted, mentally ill, or otherwise vulnerable persons;
- serving as a reminder for adult children to communicate about how they want to care for their parents;
- recording segregated separate property from community property for Trustors and their adult children;
(a) protection in divorce by clearly identifying property held before marriage and inheritance, which are presumed to be separate property if clearly identified,
(b) protecting adult children from a previous marriage, and
(c) in combination with a prenuptial or postnuptial agreement regarding separate property acquired after marriage which is kept separate from Trust property;
- protecting privacy because the Successor Trustee does not need to list Trust assets on the Probate Inventory;
- providing more immediate access to funds because the Successor Trustee does not need to wait to be appointed Personal Representative of your Estate.
- Revocable Living Trusts in Washington can provide creditor protection for beneficiaries, but not Trustors;
- avoiding probate on assets in the Trust;
- promoting communication with children about how you have provided for their future;
- peace of mind of having a flexible insurance policy promoting family harmony.
Death of One Trustor. When one spouse dies the surviving spouse gets a step-up in basis to the fair market value (FMV) on the date-of-death. So, if the marital home has been owned for decades, it can be sold without tax on the appreciation during all that time. This is a benefit of living in a community property state such as Washington.
Remarriage Following Death of One Trustor. If one Trustor passes away and the surviving Trustor decides to remarry (after a decent interval), then any assets in this Trust should be retitled in a Separate Property Trust for the surviving spouse. The Separate Property Trust should be incorporated into a prenuptial agreement for the protection of any adult children as well as the surviving Trustor. This is especially true if the surviving Trustor wishes to add property to the Separate Property Trust while married. Washington’s presumption that assets acquired during marriage are community property is strong. The presumption can be rebutted, but only in a clear writing such as a pre or postnuptial agreement integrated with a Separate Property Trust.
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Simultaneous Death of Both Trustors. If both Trustors die in or as a result of a common accident or disaster, the provisions of the Washington Simultaneous Death Act (RCW § 11.05A) would apply. Generally, the spouses would be treated as though they predeceased each other resulting in one half of the total community property of the couple being distributed by each Will, and property already in Separate Property Trusts being distributed to the beneficiaries named in the Trust.
Article III — Trust Adminsitration
Trust Administration. The Trust may be used in conjunction with probate of the Wills of JANE DOE and JOHN DOE, which leave everything to the Trust. A Will substitutes your wishes for the intestacy statute (RCW § 11.04.015) which is the default distribution to your next of kin. The Probate court has exclusive jurisdiction over the right to transfer real property of deceased people when the property is held only in the names of deceased people, with no beneficiaries named. An important reason to record a Transfer on Death Deed is that transfers by an Affidavit of Small Estates (up to $100,000) requires no real estate to be in the probate estate. The Trust shall be valid for 150 years from the date of execution pursuant to RCW § 11.98.130.
The Letters Testamentary issued by the Probate Court may be necessary for the Successor Trustee to give full effect to the Trustors’ wishes because the Letters may be demanded by third parties. Typically, final distribution should be made four (4) months after Probate is initiated or after the Trustee gives notice of the Trust to beneficiaries. If the Trust will be making distributions for more than one (1) year, then a Taxpayer ID Number will be needed for the Trust, as well as an annual tax return.
Accounting. The Successor Trustee should provide all beneficiaries (or their representatives) with a list of all of the assets of the Trust, and all debts and expenses paid by the Trust within 40 days after the Trustor dies and just prior to final distribution. Pursuant to RCW § 11.106.020 the Successor Trustee must do so at least annually. Failure to provide proper accounting, and taking too long to administer assets are breaches of the fiduciary duties of the Successor Trustees, and are common causes of disputes.
Creditor Claims. Publication of notice to creditors shortens the statute of limitations on creditor claims from twenty-four (24) months to four (4) months (RCW § 11.40.020). Publication is important so that the distributions made to the beneficiaries will not be subject to creditor claims. Publication provides a defense if a beneficiary is sued by a creditor of the Estate. Known creditors of the Estate must be notified for this defense to be effective. Successor Trustees should be diligent in paying all creditor claims from the Estate, but especially tax claims, because a Successor Trustee may be held personally civilly liable for such failure. Beneficiaries are not liable for Estate debts.
Successor Trustee Powers & Liability. The Successor Trustee has all of the powers, duties, and discretionary authority of the original trustee pursuant to RCW § 11.98.060. Specific notice requirements (RCW § 11.97.010(2)) must be met in order to shorten the statute of limitations on claims against the Trustee by beneficiaries from thirty-six (36) months to four (4) months (RCW § 11.120.040). Probate notices satisfy most of these requirements.
The Personal Representative is responsible for filing the final tax return of the decedent and paying any federal or Washington estate tax due. The tax liability from the decedent’s final income tax return is separate and distinct from estate tax. Successor Trustee’s are fiduciaries; they have duties to safeguard Trust property.
Trust Interpretation. The Trust is to be interpreted broadly to give effect to the wishes of JANE DOE and JOHN DOE including, but not limited to, interpreting the plural and singular to include each other where applicable, and for any invalid provision to be severed from the Trust while preserving the remaining provisions. Reformation by the Court to correct mistakes should be exercised if needed (RCW § 11.96A.080-90).
Community Property Trust Estate. All of the Trust Property is community property with right of survivorship remaining consistent with Washington’s community property statute (RCW § 26.16.030). JANE DOE and JOHN DOE understand that they have the right to hold separate property, and may do so at any time during their marriage by properly executing a postnuptial agreement and a separate property trust for each of them. Community property usually negates the need for a Probate of a married person’s estate.
Article IV — Control, Power to Revoke and Amend
Control of Trust Property. JANE DOE and JOHN DOE, or the survivor of the two, retain complete control of Trust Property, and the rights to all income or profits from the Trust Property. Either Trustor may add property to the Trust at any time, but both Trustors must consent to removal of Trust property if both are living.
Revocation and Amendment. This Trust may be amended at any time by both JANE DOE and JOHN DOE if both are living, or by the Surviving Trustor. Either Trustor may revoke this Trust without the consent of the other. Amendment must be done in writing, notarized, and signed by both JANE DOE and JOHN DOE jointly, if both are living, or by the Surviving Trustor.
Severability. If a Court invalidates or finds unenforceable any provision of the Trust, such invalidation shall not invalidate the whole of the Trust. All of the remaining provisions will be undisturbed as to their legal force and effect. If a Court finds that an invalidated or unenforceable provision would become valid if it were limited, then such provision shall be written, deemed, construed, and enforced as so limited.
Article V — Incapacity of the Trustors
Incapacity of One Trustor. If either JANE DOE or JOHN DOE becomes incapacitated and unable to manage the Trustor’s affairs, then the Trustor with the capacity to do so shall use the incapacitated Trustor’s share of the Trust Estate to care for the incapacitated Trustor.
Incapacity of Both Trustors. If both JANE DOE and JOHN DOE are incapacitated and unable to manage the Trustors’ affairs, then the Successor Trustee should make payments from both the income and principal of the Trust Estate for the support, comfort, health, care and general welfare of the Trustors.
Both Income and Principal Paid to Trustor or for Trustor’s Benefit. As long as Trustor lives, the Successor Trustee shall pay to the Trustor or apply for the Trustor’s benefit and care, in monthly or more frequent installments, as much of the net income of the Trust, and also as much of the principal of the Trust Estate as the Successor Trustee deems appropriate for the Trustor’s support, comfort, health, care and general welfare, taking into account the Trustor’s accustomed standard of living, and other resources reasonably available to the Trustor for these purposes.
A Trustor’s “Care.” The term “care” as used in the paragraphs above includes, but is not limited to, maintaining the Trustor during the Trustor’s lifetime in the Trustor’s regular residence, or elsewhere as may be appropriate, despite a need for extensive medical or personal care at a cost that may exceed the cost of care at a home for the elderly.
The Trustors wish the Successor Trustee, to the extent practical, to exercise discretion under these provisions to enable the Trustors to live at home, and in familiar circumstances. Involved adult children who are watchful Successor Trustees can decrease the chances of elder abuse or undue influence.
Article VI — Protection of Estate and the Trustors’ Wishes
Spendthrift Clause. The gift to any Beneficiary of this Trust shall not be anticipated, assigned, encumbered, or subject to claims or Judgments of the Trust Beneficiary’s creditors or others, or liable to attachment, execution, bankruptcy (under 11 USC § 541(c)(2) & RCW § 6.32.250(2)) or other process of law for the satisfaction of judgments or creditor’s claims.
No Trust Beneficiary shall have any right to assign, transfer, or encumber the Trust Beneficiary’s interest in the principal or income of THE DOE FAMILY REVOCABLE LIVING TRUST in any manner.
Merger When the Successor Trustee is a Beneficiary. If the Successor Trustee is also the beneficiary of a Trust, then the Trust and the individual are said to have merged into one entity. The Trust loses any spendthrift protection of Trust assets against a beneficiary’s creditors that it might otherwise have.
So, beneficiaries with creditors they cannot pay should not be Successor Trustees. However, if they are then they shall have all discretionary powers pursuant to RCW § 11.98.200-240 such that spendthrift protections are preserved. Merger also creates potential conflicts of interest with other beneficiaries.
No Contest Provision. If any Trust Beneficiary contests THE DOE FAMILY REVOCABLE LIVING TRUST or the Will of either Trustor, or attempts to have either declared invalid, or in any manner attempts to alter any of the beneficial interests created by this Trust, then the Trust shall be administered and distributed as if such person had predeceased both JANE DOE and JOHN DOE.
Perpetuities Savings Clause. Despite any other provision of this Trust to the contrary, the Trust will terminate no later than 21 years after the death of the last surviving beneficiary who is living at the time of the first of the Grantors to die.
1031 Exchanges. If the Trustors own rental property, one way they can protect the value of their estate is through a 1031 exchange. Like-kind investment property can be traded within 90 days in order to avoid paying tax on the gains in the property that would be due if the property was sold.
Long-Term Capital Gains. In 2020, holding stock for more than a year before selling reduces taxes on the gain since purchase to 0% (single with income under $40K), 15% (income up to $441,450) or 20% (income above $441,450). Stock sold in less than a year is generally taxed at the ordinary income tax bracket rate which has a top rate of 37%.
Article VII — Powers of the Trustees
Power to Appoint Successor Trustee & Guardians. So long as no Trustee is already named as Successor Trustee, and so long as the Trustees aren’t Joint Trustees, all Successor Trustees and Guardians shall have the power to appoint another Successor Trustee or Guardian to take their place, if a Successor Trustee or Guardian is unable or unwilling to serve. The Successor Trustee or Guardian shall not be liable for an appointment made in good faith. The appointment must be made in writing, signed and notarized.
The Successor Trustee shall have the right to amend the Trust to include any fee related provisions for institutional Trustees such as banks or financial services companies or any other amendment to facilitate administration without altering the distributive provisions for the beneficiaries.
Protector of the Trust. The Successor Trustee may retain the power to remove and replace any newly appointed Successor Trustee. The Successor Trustee may also retain the right to approve discretionary actions by the newly appointed Successor Trustee. By retaining such powers, the Successor Trustee may act as a Protector of the Trust. These retained powers specifically apply to institutional Trustees, such as bank Trust Departments, allowing revocation of the appointment.
Powers of the Successor Trustees. Trustees shall have all powers appropriate to the orderly and effective administration of the Trust including the powers set forth in RCW §11.98.070, which include, but are not limited to the following relating to Trust Property: To sell, exchange, or otherwise dispose of real and personal property; To form an LLC; Invest and reinvest; Continue a business; Manage real property; Pay taxes and expenses; Purchase insurance; Litigate, Compromise or abandon claims; Distribute in cash or kind; and to execute contracts including, but not limited to, the retention of professionals or agents to aid in Trust administration.
Safe Deposit Box. The Successor Trustee shall have authority to access and remove the contents of any safe deposit box JANE DOE and JOHN DOE may have without a Court Order. If a Court Order is necessary, an Ex Parte procedure for obtaining the Order is available in King County.
Successor Trustee’s Power to Create Trusts or Dissolve this Trust. The Successor Trustee shall have the sole and absolute discretion to create Trusts for Beneficiaries of this Trust as the Successor Trustee deems appropriate, including, but not limited to spendthrift trusts or asset protection trusts. These Trusts may be for special needs, tax planning, estate planning, retirement care, or any purpose reasonably calculated to benefit the Beneficiary in that Beneficiary’s particular circumstances including distributing to third parties for the benefit of the beneficiary rather than directly to the beneficiary. The Successor Trustee shall have the discretion to dissolve this Trust if administering it is uneconomical for tax reasons, small size, or otherwise. Distributions should be tailored to fulfill the Trustors’ wishes as much as practicable.
Fiduciary Tax Returns. Especially if the Trust will have earnings for a period of years after the Trustors die, but before the Trust is fully distributed, then the Successor Trustee is strongly advised to hire a CPA to prepare the fiduciary tax returns and get advice on tax issues. If undistributed to a beneficiary, a trust pays well over twice as much federal income tax as a single individual with the same amount of interest income, and almost three times as much as a married couple. It is the Successor Trustee’s duty to file the final tax return and pay all Estate taxes from the Estate and file all estate tax forms if applicable. Failure to do so could result in personal liability for the tax.
Compensation of Successor Trustees. No bond shall be required of any Successor Trustee. The Successor Trustee shall not be liable for acting, or failing to act, as long as the Successor Trustee’s conduct is in good faith. The Successor Trustee, as long as the Successor Trustee is not a beneficiary, shall be entitled to reasonable and customary compensation from the Estate. The Successor Trustee may refuse to accept compensation.
The Successor Trustee shall be entitled to reimbursement of all necessary costs. The costs of others, relating to travel to and from any funeral or memorial, may be reimbursed at the Successor Trustee’s sole and absolute discretion. Guardians are entitled to the same regardless of whether they are beneficiaries.
Domestic Trust. Not a Foreign Trust. This Trust shall not be deemed to be a foreign Trust even if the Successor Trustee appointed is not a U.S. Citizen (or lawful permanent resident or “green card” holder), and does not live in the U.S., because the Successor Trustee has the power to appoint a Citizen resident to carry out the duties, and shall be required to do so. This is important to avoid taxation and reporting requirements. Foreign gifts received during the Trustors’ lives over $100,000 in a year need to be reported to the IRS, but are not taxable.
Article VIII — Distribution of the Trust Estate
Personal Property Distribution. The Successor Trustee shall first distribute those items of the Trustors’ personal property to those persons named in any handwritten lists, if any, which are attached to or found with the Trustors’ original Wills or the Trustors’ original Trust. A detailed Personal Property Memorandum description is provided on the second page of the Will of each Trustor.
Termination of the Trust. Once fully distributed, the Trust is terminated. If all conditions (such as age restrictions) have been fulfilled, then the Successor Trustee (if the beneficiary wishes) may distribute the gift directly to the beneficiary without having to transfer the asset to the Trust first. The Trust may also be terminated if the Successor Trustee determines that administration is unfeasible whether due to diminished value, taxes, or any other reason. The Trust may also be terminated by mutual agreement of all Successor Trustees and beneficiaries.
Renunciation. Just because a beneficiary is given a gift, does not mean that they must keep it. Beneficiaries are free to renounce their gifts in whole or in part. Doing so can promote family harmony in contentious situations regarding perceived injustice.
Estrangement. If parents are estranged from or with to otherwise disinherit children, it is possible to do so giving discretion to siblings to care for them in a manner appropriate to their circumstances.
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Distribution of Remainder. Following the death of both JANE DOE and JOHN DOE the Trust becomes irrevocable. The Successor Trustee, also referred to as the Guardian of the Estate, BOB JONES, and then SALLY JOHNSON, IN THAT ORDER, shall pay all taxes and valid debts prior to distribution as follows:
THE SUCCESSOR TRUSTEE SHALL GIVE, TRANSFER, AND DISTRIBUTE THE REST, RESIDUE, AND REMAINDER OF THE TRUST ESTATE, IN EQUAL SHARES, TO THE CHILDREN OF THE TRUSTORS, IF ANY.
GIFTS TO BENEFICIARIES OVER AGE 35 ARE OUTRIGHT AND FREE OF TRUST. GIFTS TO BENEFICIARIES UNDER AGE 35 ARE IN TRUST SUBJECT TO THE CONDITIONS BELOW. BENEFICIARIES SHALL HAVE THE RIGHT TO A PARTIAL DISTRIBUTION OF A 1/3 SHARE OF THEIR GIFT AT AGE 25, AND A 1/3 SHARE OF THEIR GIFT AT AGE 30.
THE TRUSTORS APPOINT BOB JONES, AND THEN SALLY JOHNSON, IN THAT ORDER, AS GUARDIAN OF THE PERSON OF ANY AND ALL MINOR CHILDREN OF THE TRUSTORS, IF APPLICABLE. A GUARDIANSHIP APPOINTMENT IS TEMPORARY. IT’S PURPOSE IS TO AVOID A STATE APPOINTED TEMPORARY GUARDIAN. THE APPOINTED GUARDIAN SHOULD FILE FOR NON-PARENT CUSTODY AS SOON AS POSSIBLE.
FOR BENEFICIARIES UNDER THE AGE OF 35 THE SUCCESSOR TRUSTEE SHALL CREATE A SEPARATE ACCOUNT FOR EACH, AND SHALL HAVE THE SOLE AND ABSOLUTE DISCRETION TO DISTRIBUTE FUNDS FOR THE BENEFICIARY’S WELL BEING IN THE MANNER THE SUCCESSOR TRUSTEE BELIEVES JANE DOE AND JOHN DOE WOULD HAVE WANTED. DISTRIBUTIONS SHALL BE MADE FOR THE EDUCATION, HEALTH, SUPPORT, MAINTENANCE, AND GENERAL WELFARE OF THE BENEFICIARY, EITHER OUTRIGHT OR TO THIRD PARTIES SUCH AS SCHOOLS AS APPROPRIATE.
BENEFICIARIES OVER THE AGE OF 18 SHALL BE ENCOURAGED TO CREATE, IF THEY DO NOT ALREADY HAVE ONE, A SEPARATE PROPERTY REVOCABLE LIVING TRUST IN ORDER TO RECEIVE THEIR BEQUESTS. THE PURPOSE OF THIS IS TO MAKE THEM AWARE OF THE FACT THAT INHERITANCE IS PRESUMED TO BE SEPARATE PROPERTY (AS ARE PAIN AND SUFFERING DAMAGES). A SEPARATE PROPERTY TRUST GIVES THE BENEFICIARY A SEPARATE PLACE TO PUT THE INHERITANCE AS WELL AS ANY PROPERTY ACQUIRED BEFORE MARRIAGE.
ESPECIALLY IF A BENEFICIARY INTENDS TO ADD TO THE SEPARATE PROPERTY TRUST DURING MARRIAGE, THEN THE TRUST SHOULD BE INTEGRATED WITH A PRENUPTIAL OR POSTNUPTIAL AGREEMENT TO REDUCE THE LIKELIHOOD OF CONFLICT IN DIVORCE OR BETWEEN A SURVIVING SPOUSE AND ADULT CHILDREN OF THE DECEASED SPOUSE.
IF A BENEFICIARY PREDECEASES JANE DOE AND JOHN DOE, THEN THE DISTRIBUTIVE SHARE OF THE PREDECEASED BENEFICIARY SHALL BE GIVEN, TRANSFERRED, AND DISTRIBUTED, IN EQUAL SHARES, TO THE THEN LIVING CHILDREN OF THE PREDECEASED BENEFICIARY, IF ANY, SUBJECT TO THE ABOVE AGE RESTRICTION.
IF A PREDECEASED BENEFICIARY HAS NO CHILDREN, THEN THE GIFT SHALL LAPSE AND THE REMAINING BENEFICIARY OR BENEFICIARIES SHALL RECEIVE THE LAPSED GIFT IN THE PERCENTAGE OF THEIR GIFT.
IF ALL GIFTS FAIL, THEN THE TRUST ESTATE SHALL BE GIVEN, TRANSFERRED, AND DISTRIBUTED, IN EQUAL SHARES, TO THE PARENTS, SIBLINGS, NIECES AND NEPHEWS OF THE TRUSTORS, IF ANY.
Disputes. The Trustors have done all that they can to avoid disputes. In the unlikely event that a dispute should arise, that the parties are unable to resolve themselves, then Washington’s Trust and Estate Dispute Resolution Act (TEDRA) RCW § 11.96A.300 contains mediation procedures to assist the parties in reaching an agreement.
Pursuant to RCW § 42.45.130, I certify that I know or have satisfactory evidence that JANE DOE & JOHN DOE are the persons who appeared before me, and said people acknowledged that they signed this instrument and acknowledged it to be their free and voluntary act for the uses and purposes mentioned in the instrument.
The Trustors are not required to list the contents of the Trust (traditionally referred to as Schedule A) or include any statements, deeds, titles, or other important records, but it can be useful to the Successor Trustee to do so in order for nothing to be missed or overlooked in administration. If a titled asset is retitled in the Trustor’s name as Trustee of the Trust, then documentation of the retitling should be attached to the Trust to show that the Trust has been funded with the asset.
MULVANEY LAW OFFICES, PLLC is not responsible for adding or removing property from the Trust. Doing so outside the scope of service and is the responsibility of JANE DOE and JOHN DOE.
As many documents as the Trustors’ wish may be kept with the Trust to describe not just property and debt, but burial or cremation wishes, care of pets (pet trusts are allowed under RCW § 11.118.020), educational or religious wishes for children, people with whom you would like your children to remain in contact, any funeral arrangements, celebrations or gatherings the Trustors may wish for family members, or any other information the Successor Trustee may find helpful including account user names and passwords and the location of any hidden property.
SARA DARLENE ALLSHOUSE and JILL FREY personally appeared as competent and disinterested witnesses, were duly sworn, and declare that: This instrument was signed by JANE DOE and JOHN DOE, in our presence and at the time was declared by them as DOE FAMILY REVOCABLE LIVING TRUST (DATED 02-17-2020).
In their presence, at their request, and in the presence of each other, we have subscribed our names in Bellevue, Washington, on the date below attesting that at the time of the execution of the Trust, JANE DOE and JOHN DOE appeared to us to be of full age, and of sound mind and memory.
We hereby certify and declare under penalty of perjury under the laws of the State of Washington that the foregoing is true and correct.
Pursuant to RCW § 42.45.130, I certify that I know or have satisfactory evidence that SARA DARLENE ALLSHOUSE & JILL FREY are the persons who appeared before me, and said people acknowledged that they signed this instrument and acknowledged it to be their free and voluntary act for the uses and purposes mentioned in the instrument.
SCHEDULE “A” OF THE
DOE FAMILY REVOCABLE LIVING TRUST
Keep a copy of Deeds, Beneficiary Designations, and Account Statements with this schedule to aid the Executor in preparing the inventory. Attach pages as needed.
Real Estate (Include a Copy of a Transfer on Death Deed if Recorded, as Well as Mortgage, Insurance, Tax, and HOA Documents if Applicable)
Retirement Accounts (Include a copy of the Beneficiary Designation form)
Life Insurance (Include a copy of the Beneficiary Designation form)
Investment Accounts (Include a copy of the Beneficiary Designation form)
Bank Accounts (Include Copy of Payable on Death Beneficiary if Applicable)
Vehicle Titles (Include Loan Documents if Applicable)
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MULVANEY LAW OFFICES, PLLC
14205 SE 36th St. Suite 100
Bellevue, WA 98006-1553
Mulvaney Law Offices, PLLC, is located in Bellevue, Washington, representing estate planning & probate, chapter 7 and chapter 13 bankruptcy, and real estate transactions clients in Seattle, Tacoma, Everett, Bellevue, Redmond, Renton, Issaquah, Sammamish, Maple Valley, Burien, SeaTac, and throughout King, Snohomish and Pierce counties.