The Last Will and Testament is the cornerstone of Estate Planning and one of the oldest forms of the law in general. The purpose of a last will and testament is to address and handle the Estate of the decedent after their passing, but starts by identifying the Testator and the Testator’s family and revoking any previously made Wills and Codicils. When preparing to draft a new last will and testament it is important to consider the following questions about the administration of your estate, most notably, who will be in charge of it? In Washington that person is called the Personal Representative if appointed under a will, this person is also called an executor or executrix, it is important to have a primary, secondary and tertiary nominee for this position. The second big question is where the estate should be distributed and how? This is where a trust might be useful for a minor child or planning might be needed for taxes. Each person has an individual needs and desires for their estate and the best way to understand how those needs and desires interact with the law is to meet with an estate attorney.

The General Durable Power of Attorney is one of the most important documents that every adult should have. It is intended to determine a decision maker when the principal is incapacitated. There are two main areas of decisions making that are appointed by a DPOA — medical and financial — and because of this it is not uncommon for a person to have two documents if there are separate decision makers for different issues.

Healthcare Directives are used to communicate what type of medical care you may or may not want in certain situations. Healthcare Directives are only used if the patient is incommunicative. In Washington there are two situations where Healthcare Directives are used: first, when a patient is in a terminal condition as diagnosed by an attending physician, and second, a the patient is in a permanently unconscious condition as diagnosed by two physicians. The Healthcare Directive then defines the patients desires in regards to Artificial Nutrition, Artificial Hydration, Intubation, use of a ventilator and Cardio Pulmonary Resuscitation (CPR).

In 2014, the Washington State legislature adopted RCW 64.80, which authorizes the use of Transfer on Death Deeds for the real property in Washington. The purpose of these instruments is to streamline the administration of estates by avoiding probate, if possible. For the majority of people, the single greatest asset that they will own is their residence, and in many estates it is the single asset that triggers the need for a probate to administrate the property. With a Transfer on Death Deed, the estate property can be transferred to the designated beneficiary by recording the death certificate of the decedent grantor as well as an Excise Tax Affidavit. No excise tax should be due on inherited property, but the affidavit must be filed to prove this.

Trusts have similar powers to a corporation or LLC. They have an EIN (Social Security Number for business), they can own property, manage stock accounts, and enter into contracts, among other powers. The Trust is created by the Grantor who determines the rules that the trust will operate under, such as the revocable nature of the trust. The Trustee is the person in charge of managing the trust and is appointed by the Grantor. Each trust is created to serve a specific purpose, some common ones are set out below.

The revocable Living Trust is a common Estate Planning tool that allows the Grantors to create a trust that they control in their lifetime as Trustee, and can be modified or revoked by them. Upon the death or incapacity of the Grantors the trust becomes irrevocable as the Trustee is no longer the Grantor. These trust are designed to take care of the Grantor in their lifetime and pass the assets to the heirs of the Grantors. These types of trusts can also be used to manage properties, including owning LLCs that hold residential or commercial rental properties. They can also manage brokerage investments. Revocable Living Trusts can incorporate any of the trusts described below.

It is very common with minor children to include trusts to manage assets for them until they reach an age of maturity. These trust look to take care of health, security, well-being, and education of the beneficiaries. These trusts can be structured to have payouts over time so that the trust terminates at a specific age for the beneficiaries. In some cases, the beneficiary many need care their entire life do to disability, mental health issues, drug addiction, or the lack of capacity to make decisions.

When making decisions about how to care for a beneficiary, it is important to take into account the types of services they require and the types of benefits they may be entitled to. The Special Needs Trust is an irrevocable trust that is funded for the benefit of the individual that isn’t in a position to take care of themselves, which could be a spouse or parent with dementia, or a child with disabilities. The trust is setup to be alienated from the beneficiary so that it does not appear as an asset to the individual for the purpose of qualifying for Medicaid or other government benefit. The trust then pays for the services that are not covered by the government programs, such as dental and vision, as well as taking care of any other needs of the beneficiary. This allows the grantor to stretch out any available funds being used for the care of the beneficiary.

Credit Shelter Trusts are common in Washington due to our lower limit on Estate Tax, which is 2.193 million dollars, while the Federal Estate Tax starts at 11.7 million for 2021. The Washington estate tax has not been adjusted over time, so as property has increased in value and wages have increased, more people are now subject to the tax. Credit Shelter Trusts create a vehicle to transfer twice the estate tax limit to the next generation by placing up to the estate tax limit in trust that disperses the income to the surviving spouse during their lifetime while not being accounted into the surviving spouses estate, thus effectively doubling the limit.

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