[WSBAPT] Basic Trust/Creditor Question

[Claudia A Gowan]

Philip, if I am thinking correctly, it sounds like you are saying that in cases where the trustee is found negligent, that the whole of the trust assets are liable. I agree.

But chasing down a little ambiguity, it's not that you are suggesting that there may be instances where Property A is liable, but not Property B?

For example, in the tort type action that Jacob is envisioning, if a third party contractor causes an issue and the trustee wasn't negligent in hiring the third party or in hiring a property manager who hired the third party, then the trust property probably wouldn't be liable at all - the third party would.

Jacob, if you haven't checked the Restatement for trusts, you might want to look there. Mine is in my storage since COVID hit and I don't have easy access to it or I would check for some actual support.

Best, Claudia

Claudia A. Gowan

Claudia A. Gowan, PLLC
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Philip N. Jones
Sent: Wednesday, September 14, 2022 12:29 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Basic Trust/Creditor Question

If the trustee was negligent, then all of the assets of the trust will be exposed to the liability.  That's why some people and some trusts put the two houses in two separate LLCs.  But of course the first line of defense is adequate insurance.  If you have adequate insurance, the assets of the trust do not come into play.
Phil Jones

Philip N. Jones
Duffy Kekel LLP
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Portland, OR 97204
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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 Jacob Menashe
Sent: Wednesday, September 14, 2022 12:20 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Basic Trust/Creditor Question

I have a question that seems basic but I don't think I know the answer and after a bit of looking haven't been able to find it. An irrevocable testamentary trust (non-grantor for sure) owns two rental properties. Someone slips and falls at Property A. Is Property B, also owned by the trust, potentially liable to pay damages for the injury at Property A? If you or I owned two rentals, Property B would be at risk. But is it different if the owner is a trust? I am thinking maybe not, but I can't pin that down. All responses appreciated!

Thanks,

Jacob

Jacob H. Menashe
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