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Wills & Trusts
At Salmon Bay Law Group, we regularly assist our estate planning clients with both Wills and Trusts. While a Will is an essential piece of all estate plans, and many Wills contain trust language, not all clients need a stand-alone Trust. Our attorneys work closely with clients to understand their priorities and goals before recommending which elements to include in their estate plan. Below is some general information about Wills and Trusts that can help you prepare to meet with your estate planning attorney.
What is a Will?
A Will, also called a Last Will and Testament, appoints a personal representative (executor) to handle your estate when you die and directs where your property goes after your death. A Will can also:
- Nominate a guardian for your minor children
- Reduce your exposure to estate taxation, when possible
- Control the manner in which your children, grandchildren, or other beneficiaries receive sizeable assets
- Provide for a family member with special needs
- Benefit a favorite charitable organization
- Arrange care for a beloved pet
Why is it important to have a will?
Having a Will in place is important for many reasons, including:
- Naming a trusted personal representative. A Will lets you choose a reliable individual to serve as personal representative (also known as a “PR” or “executor”) to carry out your wishes.
- Providing for your minor children. Your Will can nominate guardians of your minor children, instructing the Court to appoint individuals you trust to take care of your loved ones if you are gone. You can also direct your assets into a trust for your minor – and even adult – children that provides for their needs while protecting their funds from waste or exploitation.
- Reducing estate taxes. Many Seattle area couples have significant exposure to Washington state estate taxation unless they have properly drafted tax-protection trusts (called credit shelter trusts) included in their Wills.
- Carrying out your wishes. If a Washington state resident dies without a Will, Washington intestate laws direct where the decedent’s assets go. A Will allows you to specify where your assets will go after your death.
What is a Trust?
In simple terms, a Trust is a legal entity that holds assets, such as investments or property. The person creating the Trust is called the “trustor,” “grantor,” or “settlor.” The trustor works with an attorney to create a written Trust document that:
- Designates a trustee or co-trustees to hold and manage the trust assets and carry out the directions in the trust document
- Designates one or more beneficiaries to receive the benefit of assets held in the Trust
- Specifies how beneficiaries are to benefit from the Trust’s assets, for example, by receiving cash distributions only under certain circumstances, or by having the Trustee pay for certain expenses on the beneficiary’s behalf
Given that a wide variety of assets can be held by a Trust, and many different rules for how Trust assets can be used for the beneficiaries may apply in a given circumstance, the general term “Trust” encompasses many types of arrangements.
What Are Common Types of Trusts?
There are two broad categories of trusts: (1) inter vivos trusts (Latin for “between the living”), which are created during an individual’s lifetime, and (2) Testamentary Trusts, which are included in a Will and only come into being when the trustor dies.
At Salmon Bay Law Group, the most common type of inter vivos trust we create for clients is a Revocable Living Trust. A Revocable Living Trust is intended to hold the trustor’s assets while they are living. While Revocable Living Trusts are appropriate for some individuals and families, they can create unnecessary costs and complexities for others.
Before recommending a Revocable Living Trust, our Seattle estate planning attorneys carefully consider their client’s unique family situation. All Revocable Living Trusts are accompanied by a document called a Pour-over Will. A Pour-over Will acts as a safety net to direct all of an individual’s probate property into the Revocable Living Trust.
Salmon Bay Law Group attorneys also regularly work with clients to include Testamentary Trusts in their Wills. Testamentary Trusts can be designed to meet a variety of estate planning goals—from reducing estate taxation to protecting assets going to younger beneficiaries. Common Testamentary Trusts include:
- Trust for Surviving Spouse – this “credit shelter trust” or “disclaimer trust” is designed to reduce or eliminate estate tax exposure when the second spouse dies
- Trust for Descendants – designed to protect assets that are going to a client’s children
- Trust for Grandchildren – designed to protect assets that are going to a client’s grandchildren
- Trust for Young Beneficiaries – designed to protect assets that are going to young people in the client’s life, such as nieces, nephews, or godchildren
- Supplemental Needs Trust – designed to protect assets that are going to a child with disabilities or an adult who may qualify for disability or long-term care benefits, preserving disability benefits while providing a valuable resource for the beneficiary and protecting assets for the next generation
While we have standard Trust language for clients to review and consider, we can often customize Trusts to meet a client’s specific goals.