Trusts are a flexible estate planning tool a trust attorney in Washington State can prepare to help you while you’re alive and carry out your wishes after you pass away. They can be very simple or complex. You can use a trust to help people or organizations. Though wills are the stars of the estate planning show, this supporting cast member deserves more attention.
You (the trustor) provide assets to someone (the trustee) to care for and distribute as you instruct. This benefits the beneficiary (the person or organization you want to support) in some way. In Washington State, an enforceable trust can be created orally, but it’s a much better idea to put it in writing with the help of an estate planning attorney.
A Trust Attorney in Washington State Can Help You Choose the Right Approach
Depending on your goals, establishing a trust may be a better idea than passing assets and property through a will. You can avoid probate court and use a trust to pass property to others. Trusts need not be made public, while wills, after they’re filed with probate court, are public documents. Depending on your situation, there may be tax benefits to using a trust instead of a will. The most critical difference with a will is that a trust can be effective during your life – not just after your death — so you can see the good that you’re doing. A will is only a document until you pass away and it’s probated; then it takes effect.
Your last will and testament is normally part of a comprehensive estate plan. With some limits, you can direct who will get your assets after your estate’s bills, fees, and taxes are paid. You can also have a “pour over” trust where your will instructs your executor (the person you want to administer your estate) to fund a trust with estate assets. You can nominate a guardian for your children in a will. Without a will, you’ll die intestate, and state laws determine who gets your remaining assets.
The person creating the will (the testator) needs to be at least 18 years old and be capable of reasoning and making decisions. He or she must sign it, or someone can at his or her request and in their presence. There must be at least two people (who are not beneficiaries) to be witnesses. This is to try to discourage fraud or other illegal activities.
The testator, through the will, can distribute property as they see fit (though disinheriting a spouse or child must meet legal requirements to be valid). Holographic (or handwritten) wills are not valid in Washington, and there are restrictions on oral wills. They’re limited to personal property up to $1,000, and real estate can’t be involved. Contact an estate attorney to learn more about how a will may work for you and your family.
A Trust Attorney Can Put Your Plans into Action
Under Washington statute, a trust can be created by:
- Transferring property to another as trustee during the trustor’s lifetime or by will or other disposition taking effect upon the trustor’s death
- A declaration by the property owner that they hold identifiable property as trustee.
The purpose of the trust can be nearly anything. State statute creates a few limits: “A trust may be created only to the extent its purposes are lawful, not contrary to public policy, and possible to achieve.”
A trustee has a wide range of powers under state law, but it boils down to following trust instructions, managing the assets to benefit the trustee, and distributing assets or proceeds of the trust to the beneficiary. The trustee is in a fiduciary relationship with the beneficiary, so the trustee must make decisions to help the beneficiary and not engage in self-dealing. Depending on the type of trust, the beneficiary has several legal rights to make sure the trust is managed properly. Lawsuits can be filed with the help of a trust attorney if the trust is poorly managed or the trustee abuses their position to embezzle from the trust.
Trust Lawyers Can Help You Choose the Right Trust
You can break trusts down in many ways, but the most essential categories are “inter vivos” (during life), testamentary, revocable, and irrevocable. Trusts can be in different combinations of these four categories.
Inter Vivos Trust
Inter vivos trusts are made and funded when the trustor creating them is still alive. These trusts can also be either revocable or irrevocable. A revocable trust can be changed or terminated by the trustor at any time. Irrevocable trusts typically must remain in existence as is.
Testamentary or “Pour-over” Trust
Testamentary (or pour-over) trusts are part of a will. They receive assets from the deceased’s estate. While your family won’t avoid probate, a trust can help a beneficiary get the benefit of an asset while not owning it. If the assets were given to the will beneficiary, his or her creditors could try to obtain them to pay the beneficiary’s debts. If there’s a trust, the trust owns the assets, not the beneficiary, who can get returns on it or use it (like living in a house owned in the past by parents).
Revocable Trust
Often a wealthy individual or couple will hire trust lawyers to create a revocable trust to benefit from income earned by assets; then, after the trustor’s death, assets would be transferred to the named beneficiaries. This is an alternative to a will, and the process goes forward without involving probate.
Irrevocable Trust
An irrevocable trust can’t be modified, amended, or terminated except in very rare circumstances. After assets are transferred into the trust, the trustor no longer has any ownership rights. This extreme situation has benefits. Assets are no longer part of the trustor’s taxable estate when it comes to estate taxes. An irrevocable trust may or may not be right for you, so talk to a knowledgeable trust lawyer in Washington State to see if this is a good choice for you.
A Trust Lawyer in Washington State Can Help Your Protect Your Assets and Care for Your Child
Two of the most common reasons for setting up trusts are:
- To benefit a disabled child after parents pass away
- For older Americans to structure their assets in a way that allows them to qualify for Medicaid while benefitting from their assets.
Both are based on trust law and qualifications for government benefits. These are both highly technical areas. If done incorrectly, they can create serious problems, so consult with a trust lawyer in Washington State who is experienced with these legal structures.
The cost of long-term care is astronomical. Private long-term care insurance premiums can also be unaffordable. Medicaid pays for long-term care, but many older couples or individuals have too many assets to qualify. By taking advantage of Medicaid planning and irrevocable trusts, these families may qualify for this government program. The trust owns their assets, not the individuals, who can still benefit from them. There are many rules and regulations, as well as a five year “look-back” period on asset transfers, to consider.
If you’re married, the assets belonging to the two of you are considered for determining your final eligibility. This means that transferring assets from one person to another or trying to hide them will do you no good.
You need not transfer everything into a trust to qualify for Medicaid. You can keep your car, household furnishings, some personal property, pre-paid funeral plans, and a burial plot. Having a home won’t disqualify you from Medicaid, but a lien may be put on it after you pass away to help reimburse the government for your healthcare costs.
Special Needs Trusts Can Be Set Up by a Trust Attorney
The goal of a special needs trust (SNT) is to ensure that someone dependent on you can qualify for government programs after you pass away while using your assets to improve their quality of life. The trustee can be a family member or an independent financial professional.
If you’re a parent of a child with special needs, you need to plan your estate carefully. As with Medicaid planning, there are trust law and government program qualification issues. An SNT can provide a financial safety net for the costs of the child’s care without threatening their eligibility for government assistance (which can be Medicaid and Supplemental Security Income). SNTs could also pay for travel, entertainment, pet care, and other costs for items and activities that can improve a person’s quality of life.
Our Washington Estate Lawyer May Be the Right One for You
Our team of trust lawyers at Dickson Frohlich provides clients with help in developing comprehensive estate plans, including, when appropriate, trusts. Our knowledgeable and experienced attorneys will give you the personal service you deserve. Most of our trust clients are referred from other lawyers and professionals. If those who know the estate planning process in Washington turn to us, you can, too. Call our estate attorneys to schedule a consultation.