[WSBAPT] Setting up credit trust long after Spouse passes

[John J. Sullivan]

Jeff:

That “may” is not a word I ever would insert there. 

I had one case about ten years ago now. I had done an RLT around 2000. Wife died a couple of years later. At the time mandatory splits hadn’t been replaced completely with disclaimer designs. 

Shortly after the first death the SS and I assembled my usual spreadsheet, choosing which assets to allocate to each side. But we didn’t follow through with retooling, or funding, the CST. 

Many years later SS had an auto accident with an attorney on a motorcycle and was sued. We were able to persuade the court the assets identified on the spreadsheet as allocated to the CST were beyond its reach because the CST had a constructive trust interest over those assets. We also had SS resign and son replace him as trustee. 

But that was a mandatory split situation. Is the trustee someone other than the SS?

John Sullivan 

Sent from my iPhone

> On Jan 12, 2021, at 9:50 AM, Jeff Davis <jeff at bellanddavispllc.com> wrote:
> 
> 
> Listmates:
>  
> Husband dies in 2004.  H & W had a living trust that said upon the passing of the first spouse, the trustee “may” divide the trust into two parts, (it does not say equal), with one part to be held as the survivor’s trust and one part as the decedent’s trust (Credit Trust).  Nothing was done.  Trust holds substantial amount of real estate which may be taxed, at least by Washington State, when mom passes.  Question is can the credit trust now be funded?  This is not a disclaimer issue.  The federal inheritance tax is not an issue.
>  
> Your insight would be appreciated.
>  
> Jeff
>  
> W. Jeff Davis, Esq.
> BELL & DAVIS PLLC
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