[WSBAPT] Modifying Beneficiaries of an Irrevocable Trust

[Doug Owens]

Dear David, this is an interesting question.  It is hard to answer your specific question without looking at the trust language.  It may not be binding on anyone but W and C could agree that upon the death first of W and then of stepmother, C could simply gift the share coming to C to H.  There could be gift tax implications for C but unless the share is very large there would not likely be any actual gift tax to pay at the time.  Yours truly, Doug Owens
On Aug 29, 2017, at 9:55 AM, David Faber <david at faberfeinson.com<mailto:david at faberfeinson.com>> wrote:

Some clients of mine brought up a novel situation for me yesterday:

(W)ife is a remainder beneficiary of a family trust along with three siblings. The trust became irrevocable upon her father's death. The trust specifies that if W predeceases her stepmother, W's share passes to W's issue upon stepmother's death. W has a (C)hild from a previous relationship. W and C both agree that (H)usband should receive W's interest in the trust if W predeceases stepmother. The trust grants no power of appointment to W and the trust cannot be modified by stepmother (plus, the relationship with stepmother is strained).

Would having W & C, as all of the remainder beneficiaries of a particular tranche of the trust estate, execute a written agreement directing the tranche to H upon W's passing work to supplant the current pathing of remainder beneficiaries?

Best,
David J. Faber
Faber Feinson PLLC
210 Polk Street, Suite 1
Port Townsend, WA 98368
(360) 379-4110

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