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<p class="MsoNormal"><span style="color:#1F497D">One question in passing--who is the beneficiary during Trustor's life, if it's not the Trustor and it's also not John?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">FWIW, I think you are right: If the Trustor truly passed
<u>irrevocably</u> all interest to a Trustee during Trustor's life, then Trustor no longer owns any of the trust corpus and legally has no right to change who the benefit flows to. The provision making John a beneficiary at Trustor's death isn't a non-probate
transfer; it's just a change in Trust beneficiaries triggered by an outside event.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">If the facts are right, perhaps one could argue there was a mistake of fact or law in drafting the trust that needs reform, and try to alter its terms via TEDRA.
<a href="https://app.leg.wa.gov/RCW/default.aspx?cite=11.96A.125">RCW 11.96A.125</a>.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Sincerely,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric C. Nelsen<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Eric Reutter<br>
<b>Sent:</b> Tuesday, May 28, 2019 4:53 PM<br>
<b>To:</b> wsbapt@lists.wsbarppt.com<br>
<b>Subject:</b> [WSBAPT] Does Washington Law Treat as Predeceased an Ex-Spouse who is a Named Beneficiary of an Irrevocable Inter-Vivos Trust?<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<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>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="line-height:11.0pt;mso-line-height-rule:exactly"><b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#534F0D">Eric Reutter</span></b><span style="font-size:12.0pt;font-family:"Times New Roman","serif""><o:p></o:p></span></p>
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