[WSBAPT] Setting up credit trust long after Spouse passes

[Cyrus Field]

I didn't think there was a time limit on funding trust-there are just more
complicated accounting issues dealing with income/expenses, etc. since first
death. If different contingent beneficiaries between the two trusts then
stakes are greater. I don't know how you deal with the "may" part of funding
trust. If all parties are playing nice you might be able to resolve with a
TEDRA agreement but I don't think taxing authorities would necessarily need
to honor the agreement. Good luck, Cy 

 

 

Cyrus W. Field, Attorney at Law (admitted in Washington and Oregon)

phone: 360-472-1223 Mail: POB 367, Shaw Island, WA 98286 Office: 640 Mullis
St. Friday Harbor, WA

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From: wsbapt-bounces at lists.wsbarppt.com <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; WSBA Probate & Trust Listserv
<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



3909 California Avenue SW

Seattle, WA 98116-3705                          

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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 
email:  <mailto:info at bellanddavispllc.com> info at bellanddavispllc.com
 <http://www.bellanddavispllc.com/> www.bellanddavispllc.com
 
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