[WSBARP] Testamentary Trust

Fri Mar 3 09:00:19 PST 2023

As a trustee that occasionally sees these arrangements, I reflect on a RPPT CLE I attended many years ago about these arrangements. The presenter, I don’t remember who, started the presentation with the following (paraphrasing)

“If you can’t talk your clients out of this arrangement, here are some ways to manage the likely conflict and/or litigation that it down the road for this family.”

I agree with Jason and Tom, these are fraught with problems.  Never underestimate the glue the parents provide which is no longer there after their death.   One needs to consider the eventual conflict of scheduling (everyone will want the vacation/holidays) the failure of one to be willing to pay expenses/insurance/taxes, arguments over capital improvements, and disagreement over when/if to sell.  Having the siblings as co-trustees significantly increases the possibility of a conflict.  At the very least, this should be treated as a business with cut and choose provisions and clear conflict resolution procedures.  Most of the time, the children are way better off with the money from the sale and then they can go out an buy their own place, or even buy the family cabin if they want.

Regards,

Mark
(he, him)

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: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Jason Burnett
Sent: Friday, March 3, 2023 7:49 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Testamentary Trust

I don’t do the planning side of estates—most of all I see are the problems. And these sorts of family cabins, vacation properties, etc., that try to get passed down from one couple to their several children are pretty common problems.  There’s certainly a confirmation bias issue for me, since I don’t see the happy endings, but I have seen many, many bitter endings over these sorts of arrangements. They are mistakes in my opinion.

Jason W. Burnett
Attorney at Law
Reed Longyear Malnati Corwin & Burnett, PLLC
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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 Tom Westbrook
Sent: Friday, March 3, 2023 7:35 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Testamentary Trust

Hello Timothy,

Having had to represent children that ended up in a parent impose cabin trust a few times over the years, I have come to the conclusion that the parents need to talk to their children and find out if they are on board with the arrangement. Too often the parents have hope of the cabin being what anchors the family together while the children just see it as an anchor they want to get off their necks and prefer to have their individual stuff and not have to share with their siblings. Good luck.

Sincerely,

Tom

Thomas J. Westbrook
Attorney at Law

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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 Timothy Lehr
Sent: Thursday, March 02, 2023 2:39 PM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Testamentary Trust

All,

PCs would like to set up a testamentary trust in their Wills that will be funded with a vacation cabin in WA, as well as the proceeds from PR selling a couple additional lots. The intent, is to have the trust created for the benefit of their two kids and have the vacation home in it as well as a $200k + to help initially with taxes, insurance, upkeep, etc. The kids will be co-trustees and can continue to use the vacation house or sell if they both agree. PCs just want to have that property available for the kids and funds to pay for it to ease the initial financial burden.

Does anyone have a rough template for this type of situation? I understand there is a lot to contemplate and I am beginning my research on it. But I was hoping for some direction with a template that I can spring off of. Any advice would be appreciated!

Best,

Timothy C. Lehr
Attorney & Partner

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