[WSBAPT] Testamentary Trust Question

[Diane J. Kiepe]

Tom,

A few quick thoughts.

Your client cannot put more into a testamentary trust for his son if the combined community estate is less then 4.0 Million – with that in mind, I would draft a formula testamentary trust as you indicated wife (and maybe sons with sprinkle powers) lifetime bene, Principal distribution for HEMS maybe, and the spouse not serving as Trustee (and maybe not the sons if sprinkle powers are added).

The next step in this process then is to understand that if it is a true Washington Bypass, there will not be a second step-up in basis on surviving spouse’s death – no big deal – taxes aren’t always the end game.  But there are ways you can draft the testamentary trust for a second step up in basis, if, upon the first death (his death) certain elections are made.  It would prevent his sons from being able to reach the assets prior to wife’s death however (that is they could not be lifetime beneficiaries of the trust).

If you want to talk shop more, let me know – happy to share my thoughts/experiences.

Diane J. Kiepe

Diane J. Kiepe
Douglas Eden
717 W. Sprague Ave.
Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Tom Garvey
Sent: Wednesday, June 23, 2021 9:02 AM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Testamentary Trust Question

Greetings,

I admit this is probably an easy question, but after a few days of thinking it over I have yet to have an "aha" moment about the solution.

I have a client who does not want his spouse to spend all of their comm. prop. money on the event he dies first. He wants to leave at least two million for his sons, and whatever is in excess of that the wife can use for her general welfare and care.

The structure is just not screaming at me.  Testamentary Trust with Wife as the beneficiary and Sons as remainders? 2 trusts?

They are under 4 million total for estate tax purposes.

Thank you in advance if I am missing something basic.

Tom Garvey | Attorney
Hanigan Law Office, PS
68 Main St. / PO Box 39
Cathlamet, WA 98612
(360) 795-3494
(360) 795-3001 - fax


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