[WSBAPT] What Kind of Trust

[Philip N. Jones]

I do not practice in the area of special needs trusts, so I will not comment on that subject, but ignoring special needs, I have occasionally created trusts for people who need some mild protection from themselves.  In those situations, I would create a trust with Mother as Trustor and Daughter as Trustee, and I would include language that prevents Mother from revoking the trust and making withdrawals, but I would also include language that would cause the trust to be treated as a grantor trust under the income tax laws.  You will need to consult with someone who deals with grantor trusts to determine what language would be appropriate (there are several options).  By doing so, the trust need not file separate income tax returns, and the income can be reported on Mom's returns.
They you would also want to consider including language that would make the assets includable in Mom's gross estate for estate tax purposes.  Even if Mom does not have sufficient assets to cause estate taxes to become due upon her death, the estate tax language would cause the basis to get stepped up at her death.  There are lots of options for language that would have that effect, but would not really enable Mom to send any money off to Africa.
Phil Jones

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 Jim Doran
Sent: Tuesday, May 10, 2022 12:30 PM
To: Real Property Section <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] What Kind of Trust

This elderly client has some money that needs to be put into a Trust for her own protection.  She was preyed upon by some "African Diamond Tycoon" and gave away $700,000 over the past three years. I seem to recall the term "Spendthrift Trust" in my memory banks.  Maybe we do not want to call it that but we need to accomplish the same goals.  The client is willing to do this and has her daughter available to act as the trustee.  This could be a very good situation for the client.

What kind of Trust to use?  I have done many Special Needs Trust and I am wondering if this might be a good vehicle.  The client is not receiving public benefits now, other than Social Security.  But that could change.  She has about $400,000 to be put into an irrevocable trust.

Any thoughts on this, and perhaps a model, would be appreciated.

Jim Doran

James R. Doran
Attorney at Law
100 E. Pine Street -  Suite 205
Bellingham, WA 98225
(360)393-9506
jim at doranlegal.com<mailto:jim at doranlegal.com>
www.doranlegal.com<https://nam11.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.doranlegal.com%2F&data=05%7C01%7Cpjones%40duffykekel.com%7C58005b8d92a14340c3aa08da32bbf207%7C2d66ed5354fa4c2f8c4dbff1aca5479d%7C0%7C0%7C637878080061934440%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=aROkl7vx5tt0QxKsigd4NJpP%2B3rV1jDtB9JkFwGxX7A%3D&reserved=0>
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