[WSBAPT] Naming a testamentary trust as beneficiary of non-probate asset

[Diane J. Kiepe]

Typically naming the PR, for certain assets in particular, is bad news – life insurance and qualified plans have certain creditor protection rights under various state laws when transferred to a trust for someone or directly to an individual.  This protection is potentially eliminated and subject to debts and claims against  the estate.  Just by way of example, a real case involves a totally unexpected real estate law suit filed against an estate – no one suspected it or saw it coming – cash payable to an estate is now an estate asset in certain circumstances, making pursuing claims (from the pursuer’s perspective) more attractive.

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 John J. Sullivan
Sent: Wednesday, April 19, 2023 11:05 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Naming a testamentary trust as beneficiary of non-probate asset

A long time ago I received push back when I named the testamentary trust under a will as the beneficiary, by the custodian of the asset. They said they would only accept the PR of the estate. Not sure why.

John J. Sullivan
Sent from my iPad


On Apr 19, 2023, at 10:32 AM, Diane J. Kiepe <DJKiepe at depdslaw.com<mailto:DJKiepe at depdslaw.com>> wrote:

That has been my response in the past and it has worked.  I actually have provided the language as you have to the institutions.  Some will let you say see attached and attach the longer, personalized language.

For what it’s worth, I have used the following language – just in case the client  updates their Will but not their bene designation:

To the Trustee of the Trust(s) created FBO _______________(could be name, could be class) under the Last Will and Testament of ___________ (or sometimes, with life insurance I just say of the Insured or with QP, of the Plan Participant).

Also, sometimes, if the trust is one that pays out during the bene’s lifetime (like some do – pay at 30, 35, 40 or whatever), I address that in an additional beginning to the designation to trust and make sure the first contingent beneficiary is the person outright.

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<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Jon Fritzler
Sent: Wednesday, April 19, 2023 9:58 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Naming a testamentary trust as beneficiary of non-probate asset

Client’s Will provides for the share of a beneficiary be held in trust for the beneficiary.  Client wants to name the trust as a beneficiary of non-probate asset.  I advised client to use the following language for the beneficiary designation: “[Name of trustee] or his successor as Trustee of the Trust created under section 3.1(a) of my Will dated ______, 2023.”  Client’s financial advisor replied:  “Do you have the legal name of the trust?  We can list that as an entity in the beneficiary section of the account.”

Thoughts on how to reply?  Mine is to explain that it is testamentary trust that doesn’t come into existence until client’s death and that is not assigned a “legal name” until that time.

Sincerely,
Jon M. Fritzler
Attorney at Law
717 E. 22nd St.
Vancouver, WA 98663
Tel. 360.818.4431
Eml fritzlerlaw at outlook.com<mailto:fritzlerlaw at outlook.com>

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