[WSBAPT] Was a revocable living trust created?

Thu Jun 7 09:37:56 PDT 2018

Well, yes, “my heirs” is not the same as “my probate estate.”  But the statute doesn’t say “my probate estate.”  it says “the same person.”  The UTC comment gives “my probate estate” as an example of a remainder beneficiary that is really “the same person,” but gives no indication that that is the only possible way to break the merger rule.

Having said that, my reaction was like yours, that “my heirs” was sufficient to escape merger.  But the chief civil judge was very skeptical about that and has asked the parties for supplemental briefing.  And he got me thinking like this:  if the trust declaration just said: to myself in trust for the benefit of myself for life” without more, then I would have to say no trust was created.  But at the (intestate) trustor’s death, the trust assets would be distributed to his heirs.  So, how is that different from what the trust declaration directs?  It isn’t.  So, shouldn’t the same result be reached if the trust declaration says to distribute the trust assets to trustor’s heirs when he dies?

Since everybody dies, the trust assets have to go to someone other than the trustor when the trustor dies.  So, does that make it impossible to ever meet the “same person” criterion?

Rod Harmon

RODNEY T. HARMON
       Attorney at Law
         P.O. Box 1066
      Bothell, WA   98041
     Tel:   (425) 402-7800
     Fax:  (425) 458-9096
    www.rodharmon.com<http://www.rodharmon.com>
   rodharmon at msn.com<mailto:rodharmon at msn.com>

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Christopher Small
Sent: Thursday, June 7, 2018 8:37 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Was a revocable living trust created?

I don't think listing "my heirs" as beneficiaries is the same as "my probate estate." The heirs are remainder beneficiaries.

Cheers,

Christopher Small
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On Thu, Jun 7, 2018 at 7:21 AM, Rod Harmon <rodharmon at msn.com<mailto:rodharmon at msn.com>> wrote:
In a revocable living trust instrument, the trustor named himself as trustee and lifetime beneficiary, and then: “Distribution of the Trust Following my Death.  Upon my death, any asset that remains in this Trust shall be distributed in accordance with the laws of intestate succession then in effect in the State of Washington.”
RCW 11.98.011 (1) provides in part:  “A trust is created only if … (e) The same person is not the sole trustee and sole beneficiary.”
Was a trust created?

RCW 11.98.011(1) an enactment of Section 402(a)(5) of the Uniform Trust Code, the comment to which explains that it is addresses the doctrine of merger and gives this example:  "An example of a trust to which the doctrine of merger would apply is a trust of which the settlor is sole trustee, sole beneficiary for life, and with the remainder payable to the settlor's probate estate."
In their commentary on the Washington statute, Boxx and Groblewski observe: “Under the statute, if the same person is the sole trustee and the sole beneficiary, then the trust is not valid. This is a codification of the doctrine of merger, recognized in Estate of Lonneker v. Lonneker [45 Wn.App. 222 (1986)]. Under the doctrine of merger, if one person holds all the managerial and ownership power as trustee, and all beneficial interests as the sole beneficiary, then the person's interest is fee simple. Note that if there are remainder beneficiaries, even if the trust is revocable, the doctrine of merger does not apply because there are other beneficiaries.”  88 Wash. L. Rev. 813, 887 (2013).

The trust provisions are:

§ 3.01 Distributions During My Lifetime.  During my Lifetime, my Trustee may distribute as much of the income and principal of the trust to me as my Trustee may determine advisable for any purpose subject to the limitations of § 2.07.

§ 3.02.  Distribution of the Trust Following my Death.  Upon my death, any asset that remains in this Trust shall be distributed in accordance with the laws of intestate succession then in effect in the State of Washington.

So the question is whether terminating the trust on the death of the trustor/trustee/beneficiary and distributing to his then-heirs at law is enough to avoid merger.

Rod Harmon

RODNEY T. HARMON
       Attorney at Law
         P.O. Box 1066
      Bothell, WA   98041
     Tel:   (425) 402-7800
     Fax:  (425) 458-9096
    www.rodharmon.com<https://eur01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.rodharmon.com&data=02%7C01%7C%7C211a11faf5f84f21622a08d5cc8daa9f%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636639831179198681&sdata=rX4DmXY0FXIV1d1kZ33eCjyXtPk1edd9EIZMqqscf%2BI%3D&reserved=0>
   rodharmon at msn.com<mailto:rodharmon at msn.com>

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