[WSBAPT] Setting up credit trust long after Spouse passes

[Philip N. Jones]

Just to avoid any confusion, my article starts on page 4.  Don't let the article on page 1 trick you.

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 Philip N. Jones
Sent: Tuesday, January 12, 2021 3:53 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>; jeff at bellanddavispllc.com
Subject: Re: [WSBAPT] Setting up credit trust long after Spouse passes

Take a look at my article on these issues in the January 2019 issue of the quarterly newsletter of the estate planning section of the Oregon State Bar.  The title of the article is Unfunded Trusts.  Link below.
Phil Jones

Jan 2019 OR Estate Planning & Administration Newsletter (osbar.org)<https://estateplanning.osbar.org/files/2019/01/Est_2019Jan.pdf>

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 Heather de Vrieze
Sent: Tuesday, January 12, 2021 10:12 AM
To: jeff at bellanddavispllc.com<mailto:jeff at bellanddavispllc.com>; WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Setting up credit trust long after Spouse passes

My initial response is no, you can't retroactively split the trust. The other question is whether you would really want to just to avoid some WA estate tax. Lifetime gifting could accomplish nearly the same effect as splitting the trust. The WA exemption amount in 2004 was only $850,000. Shielding that amount from WA estate tax could save tens of thousands in estate tax, but if the assets have appreciated since 2004, cost tens of thousands in capital gains tax.

I would look at gifting some assets that do not have very low basis and get a step-up on the rest.

Heather

Heather S. de Vrieze
Attorney-at-Law
[cid:image001.jpg at 01D6E8FB.BCEA10E0]
3909 California Avenue SW
Seattle, WA 98116-3705
(206)938-5500
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www.westseattlelaw.com<http://www.westseattlelaw.com/>
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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 Jeff Davis
Sent: Tuesday, January 12, 2021 9:50 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Setting up credit trust long after Spouse passes

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
P.O. Box 510
Sequim WA 98382
Phone No.:(360) 683.1129
Fax No.: (360) 683.1258
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