[WSBAPT] Trust Remainder Beneficiaries

Fri Nov 15 09:52:39 PST 2024

Thank you Josh – appreciate the thoughtful response.

Regards,

Mark

Mark C. Vohr, J.D. CPGC
Ohana Fiduciary Corporation
A Washington Trust Company
155 NE 100th St., Suite 209
Seattle, WA  98125
Telephone:  (206) 782-1189

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Joshua McKarcher
Sent: Friday, November 15, 2024 7:01 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Trust Remainder Beneficiaries

Hi Mark,

My take on this, without doing legal research that you can easily do and presumably already did, is that if Washington law does not directly address this precise issue, the following analysis is (but of course 😉) perfectly reasonable to propose, even if it means asking for the creation of new law by Washington’s courts:

1. The resolution has nothing to do with the Will, because the trust is already funded and cannot be undone. (However, if the Will had a remote contingent clause or something of the like, then perhaps it is persuasive in step 2 onward.)

2. Washington law otherwise has various features that seem clearly intended to avoid escheat, including giving assets to step-relatives before to the state.

3. Washington law would otherwise in default distribute to the intestate heirs of someone involved. What other general rule exists that wouldn’t be a total concoction of some person or court?

4. I see no credible argument that the intestate heirs of the residual beneficiaries (if even distinct? 😵‍💫) are relevant given that they predeceased the child. The only two possible sets of relevant intestate heirs are parent-testator-grantor and child-beneficiary, if I am following the facts properly. (But if facts lead elsewhere, see paragraph 7 below and buy lots of postage and envelopes to notice them all up.)

5. Hopefully the intestate heirs of the child and the parent are the same, except for the child’s other parent (and that other parent’s intestate heirs). (Other Parent is unaddressed, and his/her assets are presumably not involved. So I infer s/he is not involved and probably NOT likely intended as a potential beneficiary of parent-testator-grantor here. If he/she is even possibly involved, then that must be factored in.)

6. If indeed Parent and Child intestate beneficiaries are otherwise the same, I vote the trustee identifies them and calculates the resultant intestate distribution; drafts and files pleadings in the probate or trust matter (not sure of posture but same substantive outcome whatever the labels applied); notices them all up for a hearing; and then lets the court decide if this policy-based outcome is warranted. (Again please remember my analysis assumes no CONTROLLING law exists.)

7. If Other Parent or his/her intestate heirs are even possibly involved, notice them up and let them argue why the intestate analysis should be “run” as to deceased child-beneficiary instead of the original parent-testator-grantor.

Some may argue I’m over-complicating this by even addressing Other Parent of child-beneficiary. However, my entire point is that you are making new law; only our “custom and practice” of drafting remote contingency clauses by reference to the (here) parent-testator-grantor really justifies defaulting to that outcome here, without consideration of the non-frivolous (but ultimately probably not persuasive) argument that the CHILD is the one who died holding beneficial interests that require SOME KIND of distribution that avoids escheat. And since we are making new law, why not run the analysis by reference to the child’s intestate heirs or even the child’s own will or trust distribution if child left a will or trust?

(Again, not ultimately persuasive (to me). But not frivolous at all. A simple general power of appointment might’ve landed all these assets in the child’s estate after all.)

The voice is the first partner I worked for is in my head, especially as counsel to TRUSTEE: “Give notice to everyone and let the court decide; you shouldn’t CARE enough to exclude anyone even possibly interested. Do not convince yourself of the rightness of your view, Joshua, and hand someone a good argument that would have been frivolous or at least rejected if made earlier in the process after they were given notice. Besides, they may do NOTHING, and then you’ve really cut them off - voila!”

I hope this helps even a little bit analytically. Fun little Friday morning exercise — well, for me at least, over morning coffee, mentally drowning out the yelling of my two young sons about socks or a basketball or a water bottle or all of those successively, not concurrently; only certain sentenced convicts are so “lucky” as to have the misery all happen at once and be over with. (And, yes, apologies to anyone whose sensibilities my latter reference may offend. One must still find levity in this world, and I do not mean to equate my freedom with others’ imprisonment or any of that. I’ve just always been intrigued by how blithely news reports insert successively/consecutively or concurrently, with barely an acknowledgement of the resulting difference between serving 23 years vs. 173 years or some such thing. But I, unsurprisingly, digress.)

Happy Friday!

Best, Josh

Joshua D. McKarcher
McKarcher Law PLLC
537 6th Street
Clarkston, WA 99403
(509) 758-3345
(509) 758-3314 (fax)
josh at mckarcherlaw.com<mailto:josh at mckarcherlaw.com>
www.mckarcherlaw.com<https://urldefense.proofpoint.com/v2/url?u=http-3A__www.mckarcherlaw.com_&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=K1mLMC1eFjwfeeMM-AC6zQ&m=4N5C2uLNUTxbZti5PK5_TMg6bA7hBMF2ZUP_awr9P0KrU2es_LeJmtgxUEAcNNXA&s=2WR-6R0fTLma-K2_KxWhYWx_LPB1FbM61v8pZEkSuiA&e=>
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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 Mark Vohr <mcv at ohanafc.com<mailto:mcv at ohanafc.com>>
Sent: Thursday, November 14, 2024 6:36 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Trust Remainder Beneficiaries

Here is one I have not had to deal with before.  Seems like I should know the answer, but I don’t, at least not so sure.

Parent creates testamentary trust.
Surviving child beneficiary of the trust.  Parent’s siblings remainder beneficiaries.
Surviving Child subsequently dies after trust is funded – all the remainder beneficiaries (i.e. the parent’s siblings) predeceased the surviving child.  Survival required for the remainder beneficiaries to receive trust funds.  If they don’t, the trust does not say what happens to the remainder interest. The language of the testamentary trust is silent on what happens if none of the remainder beneficiaries survive child.

I always drafted around this possibility by, at least, going back to the parent’s heirs at law as determined as thought the beneficiary and the remainder beneficiaries died immediately prior to the death of the parent, but this trust does not have any of that saving language.  Basically, we hit a dead end as far as guidance from the trust.

In this instance, I think one then looks back at the parent’s will to see who would receive the estate had the child and the parent’s remainder beneficiaries immediately predeceased the parent.  Basically, that is likely what I would have drafted into the trust had I been the drafter (and assuming that’s what the parent wanted).  Maybe I’m bias on my own solution.

Any thoughts on this one?

Regards,

Mark

Ohana Fiduciary Corp.
A Washington Chartered Trust Company
Mark C. Vohr, J.D., CPGC, Principal
155 NE 100th St., Suite 209 Seattle, WA  98125
T:  (206) 782-1189 F:  (206) 782-1434
mcv at ohanafc.com<mailto:mcv at ohanafc.com>      www.ohanafc.com<https://urldefense.proofpoint.com/v2/url?u=http-3A__www.ohanafc.com_&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=K1mLMC1eFjwfeeMM-AC6zQ&m=4N5C2uLNUTxbZti5PK5_TMg6bA7hBMF2ZUP_awr9P0KrU2es_LeJmtgxUEAcNNXA&s=3eZASIo3CjNDwrryxnSJoc6YnYNDo_UujekdVImT88I&e=>

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