Revocable Trust for Individual with Spouse or Partner
(Pot Trust for Children) (WA)

Summary

This template is a complete revocable trust for use by an individual with a spouse or registered domestic partner in Washington that includes a pot trust for the individual's children. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template provides for the residuary trust estate to pass outright to the surviving spouse or partner upon the trustor's death. If there is no surviving spouse or partner and one or more of the trustor's children are under the specified age, the trust assets pass to trustor's children in a single "pot" trust, known as the family trust. Otherwise, the trustor's children would receive outright gifts upon reaching age 18. The trustee will administer the assets of the family trust until such time as the youngest child reaches the specified age. The trustee has broad discretion in providing for the children and is not required to treat them equally. When the youngest child reaches the specified age, the trustee distributes the family trust assets to the trustor's issue outright and free of trust. All distribution provisions should be carefully crafted to reflect the client's wishes. A pot trust may be desirable if the trustor wants to provide for their children in a way that addresses each child's particular needs, as opposed to giving fixed fractions to each child outright or in separate trusts. A pot trust allows the trustee to treat younger surviving children much as the parents would have if providing for those children during the parents' lifetime, since parents often provide for their children in ways that may not be entirely equal for a variety of reasons. For example, one child might attend an expensive private college and another child might attend a less expensive private college. Or perhaps one child was born many years after another child, and so may not have the same sorts of financial needs as the older child. A revocable trust (also known as a "living trust" or "inter vivos trust") is typically used as a will substitute to avoid probate. The revocable trust also includes elements of disability planning as assets can be managed by the successor trustee without an adjudication of incapacity. However, because the trustor retains power over the trust assets, revocable trusts do not provide asset protection or estate tax savings. In addition to the creation of the trust, the trustor will need to fund the trust with all of trustor's individually owned assets in order to avoid probate. Washington is a community-property state; thus, counsel should carefully evaluate the character of the property funding the trust. Property acquired during marriage (or domestic partnership) is community property, meaning that each spouse or partner owns a one-half undivided interest in the whole of community property. Per Washington state law, a married person (or registered partner) may not devise or bequeath more than one-half of the community property. See Wash. Rev. Code Ann. § 26.16.030. Separate property consists of property acquired prior to marriage (or entering into domestic partnership) as well as all property received afterwards by gift or by inheritance. See Wash. Rev. Code Ann. § 26.16.010. In the event of a separation, any earnings and accumulations acquired by the spouses (or partners) remain the separate property of each. Wash. Rev. Code Ann. § 26.16.140. At death, either spouse (or partner) may devise or bequeath their one-half share of community property as well as 100% of their separate property. See Wash. Rev. Code Ann. §§ 26.16.010, 26.16.030, 11.02.070. If the entire estate is community property, counsel may consider a joint revocable trust for the couple in which the married couple or domestic partnership couple act as co-trustees and beneficiaries and the single trust is funded with the community property. To assist your client with funding, once you receive a completed questionnaire, you should provide a checklist and/or letter to help them understand the additional action required to coordinate the estate plan beyond executing the documents. This includes, for example, recording new deeds for real property, updating beneficiary designations with investment, retirement, checking, and savings accounts, and more. Drafting and funding a revocable trust is a multi-step process, as summarized in the image below: Visualization of Revocable Trust Drafting and Funding Flowchart To ensure that all of the trustor's assets are properly transferred to the intended beneficiaries, a revocable trust should be used together and coordinated with a pour over will. See Will for Individual with Spouse or Partner (Pour Over to Inter Vivos Trust) (WA). For general information on trusts, see Estate Planning with Trusts: What Is a Trust? Video, Estate Planning with Trusts: Drafting Fundamentals Video, and Estate Planning with Trusts: Trust Administration Video. For a letter to a client regarding the importance of funding a revocable trust, see Letter to Client (Funding of Revocable Trust) (WA).