Home » Blog for Asset Protection News » Washington Trust Law Gets an Overhaul

Washington Trust Law Gets an Overhaul

On May 12, 2011, Governor Gregoire signed Substitute House Bill 1051 which enacted sweeping changes to Washington trust law.   These changes will have a significant impact on the administration of trusts, the duties of trustees and the rights of trust beneficiaries.  The new law will apply to all trusts created before, on, or after January 1, 2012.   If you have a revocable trust as your primary estate planning document, the new law does not require you to make any changes.   However, individuals may want to revise their estate planning documents in order to address issues that may arise due to the new provisions regarding notice to beneficiaries of the existence of the trust.
Under the new law, a trust will be created only if the trustor, the party creating the trust, has the capacity to create a trust, indicates an intention to create the trust, and the trust has a definite beneficiary (or is a charitable trust or a trust for the care of an animal).  Further, in order for the trustor to revoke or amend a trust, the trust must expressly provide the ability to do so.  If the trust does not contain such language, the trustor may not revoke or amend the trust.  There are also important changes with respect to joint revocable trusts, executed by husbands and wives or registered domestic partners.
The new law makes significant changes to the Trust and Estate Dispute Resolution Act (TEDRA).  Under the new law, if a beneficiary believes a trustee, the person administering the trust, has committed a breach of the trust, the beneficiary must bring a claim against the trustee within three years from the date that the beneficiary received a report.  That report must adequately disclose the existence of a potential claim and inform the beneficiary of the time allowed for commencing a proceeding, or from the earliest of the date the trustee died, resigned or was discharged, or the date the beneficiary’s interest in the trust terminated, or the date the trust terminated.
What the New Law Means for You.
Between the changes to federal estate, gift and generation-skipping transfer tax laws that were enacted under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of  2010  and the changes to Washington trust laws, individuals should seriously consider revisiting their estate planning documents in order to take advantage of tax planning opportunities and to address issues raised by the new Washington trust laws.  Here are some steps you should probably take:
1. Review Existing Estate Plans. It is important to re-examine existing estate plans to confirm that estate planning documents continue to accomplish your goals and to make sure that revocable trusts meet the new laws with respect to their creation and continued revocability.
2. Reconsider Trustee Selection.  Given the new notice requirements and annual information that must be provided to beneficiaries in order to keep them reasonably informed, clients may want to revisit their choice of trustee.
3. Get Ready for New Forms of Annual Reports and Accountings.  Trustees, whether individual or corporate, will want to calendar the annual reporting for all trusts and establish a mechanism to easily produce the information required under the new notice provisions.
4. Individuals may want to revise their powers of attorney to allow their attorneys-in-fact to exercise certain powers over trust assets.
Jared Bellum is a contributing author to this blog and has been admitted to practice law in the state of Washington.  He practices in the fields of bankruptcy, business start-ups, and estate planning.  JD Bellum, Attorney at Law, PLLC works in association with the Law Offices of Richard D. Seward.