[WSBARP] Separate Property Conveyance Question to Trustee

[Nick Pleasants]

Jan,
Since you are a WealthCounsel member, I will state that WealthCounsel’s RLT already includes very specific language that says property retains its character when placed in trust (Sections 1.03 and 1.04 of the full trust). Also you can list it on Schedule G-2 “Wife’s separate property” if that would make everyone feel better. I usually don’t go beyond referring the client to the language in the trust and listing an asset on the separate assets schedule. I don’t think the language on the deed would be sensical, as the Grantee is the Trust, not a person as their separate property.
There is probably some additional context needed as to what the separate assets are and where they are going.
I could imagine a scenario where wife had separate assets that are income-producing and you want to retain that income as separate property (e.g. a rental house inherited from parents). In that case, I might consider putting the separate property into an LLC where wife is the sole member, and then assign that LLC to the trust (or not – LLC operating agreement can contain successor provisions). LLC makes sense if it is rented out, needs a separate bank account to receive the rents, etc.
I could also imagine that wife has some separate bank accounts she wants to remain separate. No need to put them into the trust at all. Either designate the Trust as the death beneficiary, or designate some other beneficiaries, and have it skip the trust entirely.
If the issue is about separate property going to different people than the main trust, I would strongly consider a separate trust for the wife’s separate property.
If the issue is just about separate property in case of divorce during the lifetime of both spouses, not because you want it to be distributed differently, then I return to my original point that there is already language in the WealthCounsel trust that addresses characterization of separate/community property.
Best,
Nick

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Mark Anderson
Sent: Tuesday, January 10, 2023 12:59 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Separate Property Conveyance Question to Trustee

How about creating two sub-trusts within the main RLT that direct subsequent disposition of the property they want to keep separate?  The beneficiary of one sub-trust would be Spouse 1 and the beneficiary of the second sub-trust would be Spouse 2.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
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Tacoma, Washington 98402
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Jan Kelly
Sent: 01/10/2023 9:57 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Separate Property Conveyance Question to Trustee

Good morning,

Married couple wants to form a joint RLT, but wants to ensure that their separate property remains as a separate share of trust assets. What is the best conveyance language?

Wife conveys and quit claims to Husband and Wife, as Trustees, wife's separate property, which shall remain her separate property  ...?

Thank you!
--

Jan Kelly, JD/MBA
Attorney at Law

JK Law
PO Box 1964
Poulsbo, WA 98370
Direct Line (702) 338-6733

Licensed in Nevada and Washington.

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