[WSBARP] Homestead Exemption & Living Trusts

Tue Aug 23 16:40:16 PDT 2022

I'm concerned about a bad ruling by a bankruptcy judge regarding the now significant Washington State Homestead Exemption.

Facts: I have been named as a defendant because I drafted and funded a standard revocable living trust for a client years ago.  My client later got into some debt and creditor issues.  My client hired another attorney and filed for bankruptcy.  My client failed to disclose the living trust and some other things.  The bankruptcy trustee is trying to deny the homestead exemption for my former client for various reasons.  As I recall from law school (way back then) ... bad facts can lead to bad law.  I can now be removed from the case, without prejudice but I'm wondering if I should stay in for one of two reasons.  First, as Trust Protector to defend the trust and support my former client to say we never were trying to defraud ANY creditors.  Second, I really don't want the judge to rule that owning a primary residence inside a revocable living trust in ANY WAY lessens the now significant homestead exemption.

Does anyone have any advice for me?

Should I stay in the case?

Do you have good legal arguments why the homestead exemption should be protected in Washington like it is in California, Hawaii and other states?

Would ANYONE on behalf of THIS SECTION want to appear in the case, submit a brief or in some way ARGUE for the A) planning rights of us estate planning attorneys or B) for the protection of Washington citizens to be able to choose revocable living trusts without fear of losing an important right - the homestead exemption?

TIME IS OF THE ESSENCE as there is a hearing next week.

Stephen M. Waltar
Attorney at Law

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Legacy Estate Planning, LLC
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