You've probably heard of a "living trust" or "revocable trust," but you may not know exactly what it is. The concept is not suitable for everyday use, but it is much easier than you might think. A living trust is simply an agreement, between you, if you are an individual, or with your spouse or partner. A living trust is only one part, albeit an important part, of aestate planning strategy, designed to ensure your future and that of your loved ones.
What is a Washington State Living Fund?
Creating an estate plan may involve establishing a living trust. A Washington State Living Trust is a document created by a trustee or grantor (such as YOU). You can create a revocable or irrevocable trust in Washington state, although this article focuses more on revocable trusts. The settlor transfers ownership of his assets to the fund. For example, the dependency would fall on the deed of your home. In a revocable living trust, the settlor is the living beneficiary and his family or other close associates are the conditional beneficiaries upon his death. The trust is administered by a trustee for the benefit of the designated beneficiaries.
Revocable Living Funds
In a Washington state revocable trust, the settlor can make changes to their trust at any time during their lifetime. This includes adding or removing property, changing beneficiary designations, or even dissolving the trust if you choose. A living trust is designed to hold your assets while you, the trustee, use and control them. In many cases, the settlor acts as trustee of a revocable trust for life, provided they have legal capacity.
What are the benefits of a Washington State Revocable Trust?
A living trust offers numerous advantages as a trustee. While a trust may seem complex at first, once put in place, it acts as a secure vehicle that keeps all your property and assets in one place.
flexibility and control
One of the main benefits of owning a Washington State life fund is the flexibility that the instrument offers while you are alive. During your lifetime, a revocable living trust gives you full control over your wealth and property. Furthermore, you retain control of his assets even after his death. The successor trustee of your trust will carry out your wishes in accordance with your trust.
As the settlor of your trust, you can choose how you will make distributions over time. For example, the trust may hold property for the benefit of a young child until they reach puberty, or even until the child reaches middle age and beyond! You also have the freedom to make incremental distributions to recipients so they don't receive a massive distribution all at once. For example, you may choose to give your children a direct distribution at ages 30, 35, and 40 to ensure they use their inheritance wisely instead of wasting it.
While Washington state's probate administration works better than in other states, a properly funded living trust also avoids probate administration. Inventory is often expensive and can take months. A court oversees all distribution of your property. As a result, assets are distributed only after the probate process is complete, which takes at least four months in Washington state. While it's not terribly stressful in Washington, inventory certainly isn't a fun or fast-paced experience.
One of the main benefits of trusts is the privacy they provide. The terms of your trust, the beneficiaries and the properties within your trust are never legally required to be disclosed. Probate, on the other hand, requires a will to be made public, including any distributions that go to your heirs along with their names. Many people prefer to live confident precisely because of this!
A living trust also provides protection if you later lose capacity. In that case, your dependents would have to go to court without a fund (or power of attorney) and file for guardianship on your behalf to manage your finances and/or medical decisions. But if all of your assets and property are held in your living trust, your designated trustee can manage your assets and guardianship is not required.
What are the disadvantages of a living trust in Washington state?
While living trusts offer many benefits, they are not for everyone. We always carefully go through the ins and outs of the Living Trust with each individual client to determine if it is the right choice for you and your family. Choosing the right plan involves a careful and thoughtful analysis of your assets and needs. Estate planning is certainly not a one-size-fits-all situation!
Small or simple properties
In some situations, it may not be necessary to create a living trust. In Washington state, for example, a property worth less than $100,000 avoids the probate test entirely. In this situation, it is probably not worth the expense of forming a trust.
Similarly, many estates are "simple" in the sense that all assets can be transferred to adult beneficiaries through beneficiary designations. In these cases, the expense and hassle of creating a living trust simply doesn't make sense.
A Living Trust Requires Action
Creating a Washington Living Trust requires an additional step: you must "fund" the trust in order for it to function as intended. To protect your property from probate courts, you must transfer all of your assets to the trust by transferring title to the name of the trust. Not completing a full property inventory is a common mistake - a mistake our firm avoids by producing a robust asset chart with detailed instructions for each client!
The transfer process requires time and a bit of knowledge. Among other changes, new deeds must be recorded for your property, forms must be completed to update all accounts, and beneficiary designations and trust assignments must be made. Unlike many other companies, our highly-skilled team will guide you through each of these changes. We do not leave our clients alone! We make sure your trust is fully funded when you leave our office. We also offer a free review every three years and ongoing support when you need it!
In succession proceedings, the term for the creditor to file a claim against his estate is four months after notification to the testator. After this claim period has elapsed, the creditor will no longer be able to claim the inheritance. However, in a fiduciary relationship, creditors retain the right to demand payment of any debt from the estate until the statute of limitations on the debt expires. Generally, the successor trustee pays most debts, such as outstanding bills and taxes, of your trust before distributing the funds to the beneficiaries.
Why hire a lawyer?
There are many factors that affect whether a living fund is right for you, including different tax planning and distribution requirements that are different for each client. The old adage "You don't know what you don't know" has never been more true than with a living trust, so it is imperative to seek legal advice from an experienced estate planning attorney. Contact us and we'll do a detailed appraisal of your property and help you create a plan that fully and accurately reflects your wishes. We pride ourselves on building long lasting and long lasting relationships with our clients.Contact our officefor a free 15-minute consultation to discuss whether a living trust is right for you.
A Washington living trust holds your assets in trust while you continue to use and control them. After your death, the trust passes assets to your beneficiaries according to your instructions. A revocable living trust can provide flexibility and control.What are the disadvantages of a living trust? ›
No Asset Protection – A revocable living trust does not protect assets from the reach of creditors. Administrative Work is Needed – It takes time and effort to re-title all your assets from individual ownership over to a trust. All assets that are not formally transferred to the trust will have to go through probate.How much does it cost to set up a trust in Washington state? ›
The price of creating a living trust in Washington depends on how you go about making it. The first option is to use an online service and draw the trust up yourself. This will cost a few hundred dollars at most. The other option is to hire an attorney, which could cost more than $1,000.Do I need a trust to avoid probate in Washington state? ›
In Washington, you can make a living trust to avoid probate for virtually any asset you own -- real estate, bank accounts, vehicles, and so on. You need to create a trust document (it's similar to a will), naming someone to take over as trustee after your death (called a successor trustee).What are the advantages of putting your house in a trust? ›
Another potential advantage is that a trust is a way of keeping control and asset protection for the beneficiary. A trust avoids handing over valuable property, cash or investment while the beneficiaries are relatively young or vulnerable.How do I protect my assets from Medicaid in Washington state? ›
To keep your assets from being counted as a potential penalty against you when you apply for Medicaid, they must be placed into an irrevocable trust. You should note however that these assets will be outside your control during your lifetime.What assets should not be in a trust? ›
- Retirement assets. While you can transfer ownership of your retirement accounts into your trust, estate planning experts usually don't recommend it. ...
- Health savings accounts (HSAs) ...
- Assets held in other countries. ...
- Vehicles. ...
Once a trust is formed and the assets transferred out of the founder's name, the trust owns the assets. Practically, this means that once the founder passes away, the assets in the trust will not form part of the deceased's estate and will not be liable for estate duty.What kind of trust does Suze Orman recommend? ›
Revocable Living Trust - Do You Need One? Suze Orman explains why everyone needs a living revocable trust to protect their health and finances.What state is best to set up a trust? ›
While definitions of “best” may vary, there is a general consensus that seven states stand out in terms of favorability: Alaska, Delaware, Nevada, New Hampshire, South Dakota, Tennessee and Wyoming.
Here's a good rule of thumb: If you have a net worth of at least $100,000 and have a substantial amount of assets in real estate, or have very specific instructions on how and when you want your estate to be distributed among your heirs after you die, then a trust could be for you.How much does it cost to run a trust account? ›
Based on asset values:
The following fees apply when NSW Trustee & Guardian is administering the trust. 0.165% per year of value of Primary Portfolio and 0.385% of Growth portfolio invested in NSW Trustee & Guardian (fees are GST inclusive).
In Washington, because such property is not subject to probate, it need not be disclosed in the court record and confidentiality may be maintained. Such trusts are widely used because they allow the trustor to designate a trustee to provide professional management.
Probate may be necessary when a person dies leaving property in his or her own name (such as a house titled only in the name of the decedent) or having rights to receive property. Also if the estate is worth over $100,000. Yes, Washington has an estate tax.Is Washington a right of survivorship state? ›
In some states, the living owner automatically gains the deceased person's property under the right of survivorship. Washington, however, does not extend survivorship to community property.What is the difference between a will trust and a living trust? ›
A will is strictly concerned with what happens to your assets after you die but doesn't house your assets in the meantime. On the other hand, a living trust holds your assets until a predetermined time and provides instructions for how they'll be managed and distributed.Who owns the property in a revocable trust? ›
The trustees are the legal owners of the assets held in a trust. Their role is to: deal with the assets according to the settlor's wishes, as set out in the trust deed or their will. manage the trust on a day-to-day basis and pay any tax due.Do all estates have to go through probate in Washington state? ›
Washington State law DOES NOT REQUIRE Probate. Probate is discretionary. Practically speaking only a small percent of deaths in Washington result in a Probate being filed.How do I transfer property into a trust in Washington state? ›
To transfer real property into your Trust, a new deed reflecting the name of the Trust must be executed, notarized and recorded with the County Recorder in the County where the property is located. Care must be taken that the exact legal description in the existing deed appears on the new deed.