[WSBAPT] Irrevocable Trusts

[Philip N. Jones]

Good points.  On the subject of Washington specific resources, keep in mind that Washington has neither a gift tax nor a fiduciary income tax.  And the Washington estate tax generally follows the federal estate tax, with a different exemption.  But most federal resources should be of assistance.
Phil Jones

Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 – office
(503) 853-1482 – cell
(503) 226-3574 - fax

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Lenard Wittlake
Sent: Friday, December 18, 2020 11:45 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Irrevocable Trusts

There are CLEs but most are not WA specific.  ALI is a good source.  Rossdale has a number of trust courses.  Then there is Loring and Rounds: A Trustee’s Handbook from Wolters Kluwer.

Lenard L Wittlake, PLLC
Attorney & Counselor at Law
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of michael at westseattleattorney.com<mailto:michael at westseattleattorney.com>
Sent: Friday, December 18, 2020 11:06 AM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Irrevocable Trusts

Thanks Phil - I appreciate the three responses.  If there are no CLEs or other resources for someone to get the knowledge referred to, how ......? Thanks Mike

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-------- Original Message --------
Subject: Re: [WSBAPT] Irrevocable Trusts
From: "Philip N. Jones" <pjones at duffykekel.com<mailto:pjones at duffykekel.com>>
Date: Fri, December 18, 2020 9:31 am
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
I agree with John and Heather.  This is a very complicated area, and requires an understanding of gift tax, estate tax, and fiduciary income tax.  For example, the provisions regarding the distribution of income will determine whether the trust pays the income tax (at high rates) or the beneficiary pays the income tax (at typically lower rates).  And capital gains will usually be taxed to the trust.  And grantor trust language will cause the income to be taxed to the donor.  That is just one example of the complexities, and there are dozens more.  The fact that it is irrevocable means that any errors in drafting will be difficult to remedy.  And the IRS might not honor those changes.  Find someone experienced in these areas of the law to help you out.  As they say on TV, do not try this at home.
Phil Jones
Portland, OR

Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 – office
(503) 853-1482 – cell
(503) 226-3574 - fax

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of John Creahan
Sent: Thursday, December 17, 2020 6:15 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Irrevocable Trusts

I agree with Heather.
There are very significant differences between an irrevocable trust and an RLT and administration can be expensive.
For instance, an irrevocable trust is a separate taxpayer – so it needs its own EIN and will typically be subject to higher income taxes than an individual. In addition, I generally recommend naming a professional trustee.
I’m not aware of any relevant CLEs, but it is worth exploring why the client wants to do this and whether the costs outweigh the benefits.
I would be happy to chat for a few minutes if it would help.
Hope this helps,
John


John Creahan
www.cairn-law.com<http://www.cairn-law.com/>
206-578-5877
Fremont office:
3417 Evanston Ave. N, Suite 312
Seattle, WA 98103


From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Heather de Vrieze
Sent: Thursday, December 17, 2020 4:33 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Irrevocable Trusts

A lot depends on the purpose of the trust. Is it a trust established for a special needs beneficiary, for annual gift exclusion transfers, or something else?

The language you describe will work to make it irrevocable, but sometimes there is a need to include specific authority to modify to account for changes in the law.

Heather

Heather S. de Vrieze
Attorney-at-Law
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of michael at westseattleattorney.com<mailto:michael at westseattleattorney.com>
Sent: Thursday, December 17, 2020 3:54 PM
To: WSBA Probate & Trust Listserve <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Irrevocable Trusts

Its been a while since I was asked to do a irrevocable trust. It seems that the primary provision is as follows:

The Trust shall be irrevocable, and the Trustor hereby expressly relinquishes any right or power, whether along or in conjunction with others, in whatever capacity, to alter, amend, revoke, or terminate the Trust, or any of the terms of this Agreement, in whole or in part, or to designate the persons who shall possess or enjoy the trust property, or the income therefrom.  By this instrument, the Trustor intends to and does hereby relinquish absolutely and forever all possession.

Is that sufficient to create the Trust?  Are there any other differences between it and a RLT?  Any  CLEs one could point me to as to "irrevocable trusts" so I can get up to speed?

Thanks
Mike



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