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<p class="MsoNormal">Hi listmates,<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b>Hypothetical facts</b>: <o:p></o:p></p>
<p class="MsoNormal"><i>-In Year 1</i>, a trustor Jane Doe creates an irrevocable trust. The trust provides that, after Jane’s death, the trust assets are to be held in trust for her spouse’s John Doe’s benefit, and then, after John’s death, distributed the
children. The trustor, Jane Doe, did not retain any control over the trust and is not a beneficiary of the trust. The trust is not a grantor trust for income tax purposes. The trust document does not have any language contemplating for a divorce (i.e. no provision
that indicates a divorce will remove John Doe as a beneficiary). <o:p></o:p></p>
<p class="MsoNormal"><i>-In Year 5</i>, the trustor Jane Doe divorces John Doe. <o:p>
</o:p></p>
<p class="MsoNormal"><b><o:p> </o:p></b></p>
<p class="MsoNormal"><b>The legal question</b>: Without an express provision in the trust document contemplating a divorce, does Washington law, specifically RCW 11.07.010, apply to treat the ex-spouse beneficiary John Doe as being predeceased for purpose of
the irrevocable trust? <o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p style="margin:0in;margin-bottom:.0001pt"><b><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">My initial conclusion</span></b><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">: No, John Doe remains a beneficiary of the irrevocable
trust, as RCW 11.07.010 (marriage dissolution’s effect on nonprobate assets) seems to be limited in scope to only those assets in which Jane Doe held some form of “beneficial ownership.” This is based on my reading of RCW 11.02.005(10), which defines a nonprobate
asset as “<span style="color:black;background:white">those rights and interests of a person having beneficial ownership of an asset that pass on the person's death under a written instrument or arrangement other than the person's will</span>.” Additionally,
RCW 11.07.010(1) states that this section applies to nonprobate assets “<i>held </i>
at the time [of divorce].”<o:p></o:p></span></p>
<p style="margin:0in;margin-bottom:.0001pt"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p style="margin:0in;margin-bottom:.0001pt"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">In other words, my first reading of this statute is that the definition of a nonprobate asset does not encompass the irrevocable trust I described above,
due to the fact that (i) Jane Doe does not have a beneficial ownership in the trust, and (ii) Jane did not hold this property at her time of divorce.
<o:p></o:p></span></p>
<p style="margin:0in;margin-bottom:.0001pt"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p style="margin:0in;margin-bottom:.0001pt"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">Not having found any resources directly on this issue, however, I would be very curious if anyone has dealt with this fact pattern before, or researched
this issue. On one hand, I think my reading of the statute may be too literal, as it seems like an odd policy result for the ex-spouse to remain as a beneficiary. On the other hand, I can see the policy argument that irrevocable trusts are just that – irrevocable,
and therefore not affected by WA dissolution statutes. <o:p></o:p></span></p>
<p style="margin:0in;margin-bottom:.0001pt"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p style="margin:0in;margin-bottom:.0001pt"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">As always, any insight is much appreciated.
<o:p></o:p></span></p>
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