The Washington living trust is an estate planning tool designed to avoid probate while providing long-term property management. The term "revocable" means that you may revoke or terminate the living trust at any time. A "living" document is a document which you may continually edit and update.
A living trust generally involves three "persons" in its creation and administration: (1) a settlor or grantor who creates the trust; (2) a trustee who administers and manages the trust and its assets; and (3) a beneficiary who receives the benefit of the administered property in the trust.
Executing a Declaration of Trust form establishes your living trust and sets forth its terms and conditions. After transferring assets to your living trust (with you as trustee), you then administer the assets for your own benefit and the beneficiaries, however, beneficiaries get no distributions during your lifetime.
The trustee of a trust makes all of the decisions for the trust and maintains complete control over all property placed in the trust. Control over living trust assets is accomplished by appointing yourself the "trustee". You will also appoint a successor trustee, who, upon your demise, will distribute the property in your living trust as specified, without probate. The role of a successor trustee is to assume the duties of the trustee when a predetermined event such as incapacity, disability or death occurs. In the event of incapacity or disability, other documents such as a living will, health care proxy and power of attorney will be needed. Take the time to review a comprehensive living trust kit. Upon the demise of the trustee, the successor trustee passes revocable living trust property quickly and confidentially to the beneficiaries without probate.
A living trust must contain assets for the benefit of one or more beneficiaries. Placing property in the trust is called "funding the trust". Most valuable assets should be transferred into your living trust but you may fund the trust with as much or as little as you wish. Though there are many types of property that can not be placed in your living trust, you can transfer real estate (including homes), business interests, money market accounts, stocks, bonds, mutual funds, precious metals, gems, antiques, artwork, royalty contracts, patents, copyrights, numismatic as well as other valuable collections and business interests into your trust. See a list of allowed living trust assets.
In the eyes of the IRS, a revocable living trust is transparent, allowing the grantor, as trustee, to buy, sell, trade, mortgage, liquidate, gift or otherwise treat revocable living trust property as personal property while having no impact on personal income taxes.
Some assets should not or can not be transferred to a revocable living trust:
1. Revocable Living Trusts cannot own IRAs because an IRA, by law, must be owned by the participant, i.e., a person. Usually a beneficiary has to be a person, however, if a trust meets the following requirements, the individual beneficiary of the trust who is designated as the IRA beneficiary of the trust, being the IRA beneficiary with the shortest life expectancy (i.e. the oldest beneficiary of the trust) may be treated as the designate beneficiary, subject to the following:
(a) The trust is valid under state law;
(b) The trust is irrevocable or will, by its terms, become irrevocable upon the participant's death;
(c) The beneficiaries of the trust are identified from the trust instrument; and
(d) The plan administrator, within nine months of participant's death, must be furnished with a copy of the trust instrument.
2. Bank Accounts such as checking and savings accounts or any account that move money frequently should not be placed into a revocable living trust. You may be able to make the trust the beneficiary of such accounts.
3. Autos / Vehicles that require insurance may be difficult to insure if placed into a revocable living trust as many insurance companies are hesitant to issue a policy when a vehicle is title to a trust. In addition, most vehicles are not very valuable and depreciate rapidly.
A common misconception is that a living trust replaces a last will and testament. In fact, a special type of last will, referred to as a Pour-over Will, is a companion to the living trust. Assets not transferred to the living trust are subject to probate upon the grantor's death. Because a Pour-over Will is used to transfer or "pour" all of the grantor's remaining property into the living trust upon his or her death, a Pour-over Will is usually executed simultaneously with a living trust.
Download and customize the Washington revocable living trust form or a complete Washington estate planning toolbox including WA revocable living trust, WA pour-over will, WA deed to transfer real estate to the trust, amendment to trust, WA living will, WA health care power of attorney (health care proxy), WA durable power of attorney (general poa), revocable living trust revocation forms and instructions. [Revocable Living Trust Estate Toolbox]
Complete all trust documents on your computer screen. A completed example and instructions are included with each download. Leave assets to any beneficiary, including minor children. [Revocable Living Trust FAQ]