[WSBAPT] 11.98.072 Notice

[Jacob Menashe]

Thanks to everyone for their responses. The reason for my being slow to respond to this last post is that I have been reading Professor Boxx’s outstanding article!

Best,

Jacob

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Sam Furgason
Sent: Wednesday, May 20, 2015 5:14 PM
To: 'WSBA Probate & Trust Listserv'
Subject: Re: [WSBAPT] 11.98.072 Notice

Jacob,
The earlier reply from Prof. Boxx addresses a lot of your question. I recommend reading the article. But just to give a little quick context, in 2011 trust legislation in Washington was extensively revised, and the revisions included many specific requirements about what information had to be provided to trust beneficiaries. That was intended to provide more transparent trust administration.

(There are basically two types of trust administration in Washington: institutional and private. For many years trusts were creatures for the well-to-do. Bank trust departments and trust companies managed the trusts. Then the living-trust-to-avoid-probate marketing movement came in from other states, and soon enough trusts were being managed by, quite often, an oldest child. Intra-family issues, such as younger siblings not being able to get information about the trust, arose. So the pressure grew to require information to flow out.)

Transparency and accountability was one of the purposes of the 2011 re-write. Specific information was required, and if that information were provided, the trustee had some assurance s/he had satisfied the requirements  (in a “safe harbor”). The legislation would help out those beneficiaries who were being kept in the dark, but it did impose a burden on all trustees. 11.97.010 – which once basically said little more than that a grantor could waive almost any reporting requirement except the one that a trustee use good faith and honest judgment – was extensively rewritten to impose numerous requirements. That section went from one medium paragraph to five paragraphs and around 8 subparagraphs. Advising a trustee client became much more predictable, but also much more extensive. Probably more costly for the clients, too.
And then… and then… along came an outcry about the requirements. And, in 2013, the specific requirements were removed from 11.97, but the general transparency requirement was left in, plus enough cross—references to make the section look like something from the Internal Revenue Code. So, sometimes when things happen like that the result is some ambiguity. You have discovered some of the ambiguity, IMO. If you have a suggestion, or a solution, which might make for a better world of trust law, there is a committee somewhere, somewhat weary but still trudging on, you can work with.
S

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jacob Menashe
Sent: Wednesday, May 20, 2015 11:45 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] 11.98.072 Notice

Thank you so much – and especially for including the yellow highlighting. But I’m not even sure if I am reading this right. Is this just another reason, beyond what I asked before, for the proposition that a person can’t set up an irrevocable trust without the trustee having the duty to kept remainder beneficiaries reasonably informed (unless there’s a spouse involved as referred to in subsection 3)? And if that’s the case, what meaning is there in saying the trustor can waive the notice requirements of subsections 2 and 3?

Jacob


From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Sam Furgason
Sent: Wednesday, May 20, 2015 11:15 AM
To: 'WSBA Probate & Trust Listserv'
Subject: Re: [WSBAPT] 11.98.072 Notice

Don’t forget
11.97.010
Power of trustor — Trust provisions control.

The trustor of a trust may by the provisions of the trust relieve the trustee from any or all of the duties, restrictions, and liabilities which would otherwise be imposed by chapters 11.95<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.95>, 11.98<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.98>, 11.100<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.100>, and 11.104A<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.104A> RCW and RCW 11.106.020<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.106.020>, or may alter or deny any or all of the privileges and powers conferred by those provisions; or may add duties, restrictions, liabilities, privileges, or powers to those imposed or granted by those provisions. If any specific provision of those chapters is in conflict with the provisions of a trust, the provisions of the trust control whether or not specific reference is made in the trust to any of those chapters, except as provided in RCW 6.32.250<http://apps.leg.wa.gov/rcw/default.aspx?cite=6.32.250>, 11.96A.190<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.96A.190>, 19.36.020<http://apps.leg.wa.gov/rcw/default.aspx?cite=19.36.020>, 11.98.002<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.98.002>, 11.98.200<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.98.200> through11.98.240<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.98.240> , 11.98.072<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.98.072>(1), 11.95.100<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.95.100> through 11.95.150<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.95.150>, and chapter 11.103<http://apps.leg.wa.gov/rcw/default.aspx?cite=11.103> RCW. In no event may a trustee be relieved of the duty to act in good faith and with honest judgment. Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as "absolute," "sole," or "uncontrolled," the trustee must exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.


From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jacob Menashe
Sent: Wednesday, May 20, 2015 9:35 AM
To: WSBA Probate & Trust Listserv; 'scairns at hansonbaker.com'
Subject: [WSBAPT] 11.98.072 Notice

RCW 11.98.072, in subsection 1, says that a trustee must keep all qualified beneficiaries (defined by 11.98.002 to now include remainder beneficiaries) “reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.” Subsections 2 and 3 spell notice that must be given. Subsection 5 says a trustor may waive or modify the notification requirements of subjections 2 and 3.

My query: Can the trustor waive the dictate of subsection 1 – the reasonably informed part? It seems to me that waiving 2 and 3 is fairly meaningless unless it applies to the overall charge in 1. How can you do 1 without providing the notice in 2. As I seem to be reading the statute, what exactly can the trustor waive? Or, in other words, can a person (other than the situation in subsection 3) ever set up an irrevocable trust without the trustee being required to keep the remainder beneficiaries reasonably informed!

Thanks,

Jacob

_______________________
Jacob H. Menashe
Hickman Menashe, PS
4211 Alderwood Mall Blvd., Suite 202
Lynnwood, WA 98036
(425) 744-5658 phone
(425) 744-6078 fax
Satellite Office in Bellevue
www.hickmanmenashe.com


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