[WSBAPT] Unfunded trust

Mon Oct 26 11:47:00 PDT 2020

I think as to personal property that doesn't legally require ownership documentation, there's no issue, and a Declaration of Trust is sufficient to place the property in the trust. A "bill of sale" or other instrument to convey is not needed.

As to personal property that generally requires documentation, such as title certificates for vehicles, the issue becomes one of conflicting statutes (RCW 11.98.008 versus every other statute regarding documentation for transfers of ownership, for vehicles, bank accounts, real estate, stocks, etc.), the effect of possible prejudice to third parties, impact of the statute of frauds, etc. Maybe the Declaration of Trust would be effective against intestate beneficiaries, but not against third parties without notice?

Then practically speaking, would DOL transfer title on the strength of a Declaration of Trust, or would they insist that the Trustor should have transferred title during her/his life? Could one sue DOL for a writ of mandamus, to require them to complete the "ministerial act" of transferring title into the trust?

The results might actually differ depending on the legal significance of the statutes creating the documentation requirement.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone; please call the Seattle office. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis; please call the Seattle office.

MAIL AND DELIVERIES can be received at the Seattle office. For any other needed arrangements, please call the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Bryce Dille
Sent: Monday, October 26, 2020 11:25 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Unfunded trust

Is that also true as to personal property I have seen trusts created by some that add an exhibit that states the trustors transfers all banks accts, vehicles, boats and household goods and furniture etc. but there is no transfer with the bank nor are any titles transferred or is there a bill of sale or the equivalent as to other items of personal property. If there is a pour over will then not so much an issue but it can be if the will or if the is no will and the beneficiaries or heirs are different then the residuary beneficiaries in the trust. Do you need separate documents of conveyance especially as to bank accouts and property that is specifically titled like vehicles and boats.

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 Eric Nelsen
Sent: Monday, October 26, 2020 10:55 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Unfunded trust

Some time in the least year or two I was startled to learn that just a "Declaration of Trust" might be sufficient to transfer real property into a trust, when the Trustor and the Trustee are the same person. Even in the absence of a deed, apparently. But, despite the statute below I would do more research to determine to what extent Declaration of Trust is sufficient to actually place real property into a Trust, under Washington law.

RCW 11.98.008<http://app.leg.wa.gov/RCW/default.aspx?cite=11.98.008>
Trust creation-Methods.
A trust may be created by:
(1) Transfer of property to another person as trustee during the trustor's lifetime or by will or other disposition taking effect upon the trustor's death;
(2) Declaration by the owner of property that the owner holds identifiable property as trustee; or
(3) Exercise of a power of appointment in favor of a trustee.

This statute is from the 2011 overhaul of Trust statutes, so there might be some legislative history and commentary that could shed some light. Contrast the new statute with some old decisional law:

It has become the settled law of this state, in harmony with the generally accepted rule in this country, that an express trust in real property cannot rest in parol, but must be evidenced in writing. Among our decisions holding to this view of the law we note particularly the following, because they have to do with claimed express trusts in favor of grantors as against their direct grantees, which is this case: Spaulding v. Collins, 51 Wash. 488<https://casemaker4.casemakerlegal.com/internallinks/citation/51%20Wash.%20488>, 99 P. 306<https://casemaker4.casemakerlegal.com/internallinks/citation/99%20P.%20306>; Kinney v. McCall, 57 Wash. 545<https://casemaker4.casemakerlegal.com/internallinks/citation/57%20Wash.%20545>, 107 P. 385<https://casemaker4.casemakerlegal.com/internallinks/citation/107%20P.%20385>; Kalinowski v. McNeny, 68 Wash. 681<https://casemaker4.casemakerlegal.com/internallinks/citation/68%20Wash.%20681>, 123 P. 1074<https://casemaker4.casemakerlegal.com/internallinks/citation/123%20P.%201074>; Arnold v. Hall, 72 Wash. 50<https://casemaker4.casemakerlegal.com/internallinks/citation/72%20Wash.%2050>, 129 P. 914<https://casemaker4.casemakerlegal.com/internallinks/citation/129%20P.%20914>, 44 L. R. A. (N. S.) 349.
         In this last-cited case, Judge Gose, speaking for the court, said:
'Our statute, Rem. & Bal. Code, § 8745, provides: 'All conveyances of real estate or of any interest therein, and all contracts creating or evidencing any encumbrance upon real estate shall be by deed.' The cases cited settle the law in this state in this, that a resulting trust can, and that an express trust cannot, be proven by parol testimony, the latter being within the prohibition of the statute quoted.'
         This quoted statute has remained unchanged since territorial days, and may now be found as section 10550, Rem. Comp. Stat. We make this quotation from Arnold v. Hall to render it plain that this is our statute of frauds touching the necessity of an express trust being proven in writing. Now as to what such writing shall contain: It seems plain that it shall, at least, identify the property with the same certainty as is required in a deed of conveyance.

Pacheco v. Mello, 139 Wash. 566, 247 P. 927 (1926).

My ancient 54 Am.Jur. Trusts (1945!) indicates at Sec. 42 that transfer of the res is "not requisite to a declaration of trust." On the other hand, RCW 64.04.010 pretty clearly says that "every conveyance of real estate, or any interest therein...shall be by deed." So maybe a Declaration of Trust isn't a "conveyance"? Am.Jur. says at Sec. 42 "it has generally been held that provisions of the statute of frauds relating to the creation or transfer of interests in real estate are not applicable,", citing cases in Mississippi, Texas, and West Virginia, and some ALRs. But then, at Sec. 61, it says that sometimes that ain't so, citing North Carolina cases.

Regarding procedure-this might be amenable to TEDRA, but I would be cautious. I think it needs a thorough analysis of the legal basis for the Trustee asserting ownership of the real property. I think it's possible that a quiet title action would be more appropriate, naming the heirs at law of decedent as defendants, to confirm title in name of the Trust. That would allow the Trustee to then sell and/or distribute the real estate, and would realign the public record with ownership.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone; please call the Seattle office. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis; please call the Seattle office.

MAIL AND DELIVERIES can be received at the Seattle office. For any other needed arrangements, please call the Seattle office.

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 Jon Fritzler
Sent: Thursday, October 22, 2020 5:08 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Unfunded trust

Facts:  Decedent dies with an unfunded living trust and no will (pour-over or otherwise).  By unfunded I mean that the decedent's assets, including real property, were never formally titled in the name of the trust.  However, the assets are listed on a schedule that is attached to the trust and is signed by the decedent.  The residuary beneficiaries of the trust are different than the decedent's heirs under the intestacy statute.  Has anyone been successfully (or unsuccessfully) used a TEDRA petition to get a ruling that the distribution of the assets are controlled by the trust?

Sincerely,
Jon M. Fritzler
Attorney at Law
717 E. 22nd St.
Vancouver, WA 98663
Tel. 360.818.4431
Eml fritzlerlaw at outlook.com<mailto:fritzlerlaw at outlook.com>

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