Time to Tune-Up Your Trust
New Laws Increase Duties and Responsibilities of Trusts and Trustees
On May 12, 2011, the Governor signed into law legislation which makes significant changes to
Washington trust law. The changes went into effect on January 1, 2012 and affect trusts currently in
existence and all future trusts. The new changes make a distinction between revocable and
irrevocable trusts so not all trusts are immediately affected. The net result of these changes will be
new reporting requirements by certain trustees who are responsible for the management and
administration of a designated trust. Our office strongly recommends that those persons who serve
as a trustee schedule a consultation to have a trust reviewed and be advised as to new duties and
The list of changes is too lengthy to mention in this newsletter. Summarized below are several
changes that may be of most interest:
- Notice to Beneficiaries and Other Interested Persons of Irrevocable Trust. A trustee of
an irrevocable trust now has the duty to keep all persons interested in the trust, including
beneficiaries, reasonably informed about the administration of the trust. This new
requirement applies to all irrevocable trusts currently in existence. In order to satisfy this
requirement, the trustee must generate a written financial report most likely on an annual
basis although the statutory language does not state a definite time period. The contents of
the written financial report are spelled out in the statute. A beneficiary or interested person
may request that the trustee provide additional information related to the administration of
the trust. A trustee who provides a report that contains the required statutory information is
presumed to satisfy the trustee’s duty to keep such persons reasonably informed.
- Notice of Creation of Irrevocable Trust. For irrevocable trusts (revocable trusts that
become irrevocable, special needs trusts, etc.) created after December 31, 2011, the
trustee must give written notice of the existence of the trust that complies with the statute to
all interested persons, including beneficiaries. A trustee who provides written notice that
complies with this new law satisfies the duty to inform interested persons, including
beneficiaries, of the existence of the trust.
- New Statutory Section on Revocable Living Trusts. The Legislature created a new,
separate section of rules applicable to revocable living trusts. This section addresses such
issues as: capacity required of a trustor to create, amend, revoke or add property to a
revocable living trust; the procedures to revoke or amend such trusts; and, a limitation on
judicial actions contesting the validity of a revocable living trust. The notice requirements in
the previous two paragraphs do not apply to revocable living trusts until such time as a
revocable living trust becomes irrevocable.
- Certification of Trusts. Third parties such as financial institutions often ask trustees for a
copy of a trust. Under this new section, the trustee may instead provide to a third party a
written document called a Certificate of Trust which contains the necessary information
needed to do business with the trust. This document protects the privacy of the trustor and
beneficiary. A beneficiary is still entitled to receive a copy of the trust.
- Distribution of Trust Assets Upon Termination. A new section of the law allows a trustee
to send out a written proposed plan to the beneficiaries describing how the trust assets will
be distributed. A beneficiary would have only thirty days to object to the proposed plan if the
Trustee provides proper notice of the procedure to object.
- Correction of Mistakes in a Trust (and Will). The terms of a trust (or Will) may be
“reformed” by a court or a binding out-of-court agreement to change the language to reflect
the intention of the trustor (or testator). This change requires clear and convincing evidence
or agreement of the parties that there was a mistake and what was the trustor’s (or
testator’s) true intent. This is a major change in Washington law.
- Determining Whether a Trust is a Washington Trust. Occasionally, a question arises as
to the “situs” or home state of a trust. This is important in determining which state law
governs the operation and administration of a trust. This new section of the law sets out a
procedure for making this determination. Also addressed in this section is a process for
registering an out-of-state trust as a Washington trust.
Barry M. Meyers
Steven D. Avery
Elder Law Offices of Meyers & Avery
DISCLAIMER: The content of this newsletter is: for information purposes only, subject to change by government agencies, should not be relied upon as current, and, does not constitute legal advice. Reading this newsletter does not establish an attorney-client relationship.