[WSBAPT] Trust Property Not Distributed Per Terms, Now Beneficiary has died....

[Philip N. Jones]

Down here in Oregon, the courts have adopted a judicial doctrine known as the early vesting rule, which basically states that the rights of the beneficiaries vest at the earliest possible date, which is usually the date of the death of the testator/trustor, unless the document states to the contrary.  Of course, a well-drafted document need not resort to such a doctrine.  Does Washington have such a doctrine?
Phil Jones

Philip N. Jones
Duffy Kekel LLP
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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, November 2, 2021 12:02 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Trust Property Not Distributed Per Terms, Now Beneficiary has died....

What Eric said, but with the caveat that I often draft trusts so that there are reasons that a trustee can reasonably, and in accordance with the terms of the trust withhold distributions otherwise required by the terms of the trust. Often those are going to be discretionary, and questions of fact, but might warrant a careful reading of the trust.

Heather

Heather S. de Vrieze
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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 Eric Nelsen
Sent: Tuesday, November 2, 2021 11:25 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Trust Property Not Distributed Per Terms, Now Beneficiary has died....

I would say that D/PB’s right to full distribution vested at age 40, and all funds should be distributed immediately to D/PB’s Personal Representative. The administrative reality that the Trustee didn’t timely distribute funds has no effect on D/PB’s right to the distribution, and the PR succeeds to all rights of action belonging to the decedent. RCW 4.20.046(1)<https://app.leg.wa.gov/RCW/default.aspx?cite=4.20.046>.

I can see that the phrase "if D/PB dies before the complete distribution of their trust share" kind of implies that undistributed funds would go to the contingent beneficiaries. But in this context, I think the phrase should be construed to mean that D/PB’s right to a distribution has not vested, rather than that the distribution has not actually left the Trustee's hands. Once the right to final distribution is vested, the Trustee’s duty is almost entirely ministerial, and the Trustee has no right to withhold funds except for lawful purposes of winding up the trust. I think.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
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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 Brent Williams-Ruth
Sent: Tuesday, November 2, 2021 10:52 AM
To: WSBA Probate & Trust Listserv <WSBAPT at lists.wsbarppt.com<mailto:WSBAPT at lists.wsbarppt.com>>
Subject: [WSBAPT] Trust Property Not Distributed Per Terms, Now Beneficiary has died....

Greetings List -

New to me situation.

Decedent/Primary Beneficiary (D/PB) dies at 50 years old. The parents of the D/PB set up a family trust decades ago with a term that said the Trustee SHALL distribute, free of trust, once the D/PB attains the age of 40.

That Trust distribution and dissolution of the Trust never happened and D/PB died with assets still in the family trust.

Can/should the Trustee make a distribution now to the D/PB estate for distribution under the D/PB Will OR because the funds were left in the Trust, the contingent beneficiaries who were to take if "D/PB dies before the complete distribution of their trust share.."

One the one hand, I say it should pass by terms of the Trust, but then I wonder if the beneficiary of the D/PB estate would have actionable claim against the Trustee because they failed in their duty to comply with the terms of the trust and distribute free of trust - so those assets would have been in the D/PB's estate if they did their duty.

Appreciate thoughts and input on this.

Thank you!

Brent Williams-Ruth (pronouns: he/him)
Attorney-At-Law

Law Offices of Brent Williams-Ruth, a division of BWR Consulting, PLLC

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