[WSBAPT] Trust Remainder Beneficiaries

Mon Nov 18 19:56:58 PST 2024

Mark,

I’m reluctant to send this email. But I’d want Mark or Phil to send it to me if roles were reversed. And, I do NOT need to be “right” – I am merely intrigued.

Let me explain my reticence, Mark, in relying exclusively on this provision as controlling authority as opposed simply to persuasive authority.

I have pasted below the entire provision with key underlines and boldface text.

I am concerned that its terms apply ONLY when the trust is a PURPOSE or “use” trust that never had discernible beneficiaries, as your testamentary trust did.

I am having a hard time making the language of this provision as emphasized below apply simply to any noncharitable trust that ends up with a failure of beneficiary. Perhaps judicial gloss has extended its application.

But it sure is persuasive authority that this very intuitive result should obtain, even if technically by judicial opinion versus statutory command.

RCW 11.98.015: Noncharitable trusts without ascertainable beneficiaries.<https://app.leg.wa.gov/RCW/default.aspx?cite=11.98.015>

Except as otherwise provided in chapter 11.118 RCW or by another statute, the following rules apply:

(1) A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected by the trustee. The trust may not be enforced for longer than the time period specified in RCW 11.98.130 as the period during which a trust cannot be deemed to violate the rule against perpetuities;

(2) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. Such person is considered to be a permissible distributee of the trust; and

(3) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use must be distributed to the trustor, if then living, otherwise to the trustor's successors in interest. Successors in interest include the beneficiaries under the trustor's will, if the trustor has a will, or, in the absence of an effective will provision, the trustor's heirs.

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<http://www.mckarcherlaw.com/>

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Mark Vohr
Sent: Monday, November 18, 2024 2:47 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Trust Remainder Beneficiaries

Phil –

          Perfect!   Thank you for that analysis exactly what I was looking for.  That’s where I came down on this one, but the statute confirms it.  In Washington, the statutory cite is RCW 11.98.015.

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<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Philip N. Jones
Sent: Sunday, November 17, 2024 12:06 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Trust Remainder Beneficiaries

In most states, a trust that lacks beneficiaries is known as a failed trust.  Here in Oregon (a Uniform Trust Code State), here is the answer to your question:

ORS 130.190 (OUTC §29).  If a noncharitable trust lacks beneficiaries (because all of the beneficiaries have died, for example), the assets return to the settlor.  If the settlor has died, the assets return to his successors, typically his estate.  In that case, the assets pass under the settlor’s will, or if he had none, by the intestacy laws applicable to his estate.  The same result would most likely apply to a probate asset bequeathed to a trust that turns out to not exist.  Or a nonprobate asset titled in the name of a nonexistent trust or in the name of the trustee of a nonexistent trust.  All of these situations are sometimes referred to as a failed trust.

Oregon also follows the early vesting rule, which says that the rights of the aunts and uncles (in your case) vest when your client’s parent died, unless the will says otherwise.  So the assets would pass to their estates.  But your will says survivorship is required.  So the early vesting rule does not apply.

But the question is whether these rules apply in Washington?
Phil Jones
Portland, OR

Philip N. Jones

BLACK | HELTERLINE LLP

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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
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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
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