Legal Question in Wills and Trusts in Washington

Re: Estate Law

No, a living trust does not avoid any tax. The government taxes your estate on the transfer of wealth over 2 million dollars (next year it is 3.5 million). It doesn't care how you give it away, only THAT you gave it away. So whether you use a will or a trust or a non-probate asset (like life insurance), the only thing that will keep you from paying taxes is if you are eligible for using an exemption or a credit against the taxes owed.

And Community Property has nothing to do with a trust vs. a Will.

If your estate assets are more than 2 million dollars you should be talking to an experienced estate planning attorney with some tax background.

Re: Estate Law

I LOVE this question! Living Trusts avoid probate. That is their major function. There are some other "benefits" but I find those benenfits of little to no value. Probate is the slang term for estate administration where a court ensures that the proper individual is distributing your assets to the rightful beneficiaries. A Living Trust avoids this process. In some states this process is burdensome and expensive (e.g., California). But in Washington the probate process is streamlined. Therefore, I tend to not promote living trusts in Washington unless property is held in more than one state or unique circumstances exist. It has been my experience that clients spend as much on a living trust as they would on the actual probate process! Anyway, married spouses would need some form of the probate process to transfer assets to the other spouse upon death (there are exceptions). But in a situation where all assets are community and the spouses desire to transfer their assets to the surviving spouse upon death, they can enter into a Community Property Agreement (in community property states such as Washington). This document is a contract between the spouses and directs that all assets of the decedent spouse vest immediately to the surviving spouse upon the death of the decedent spouse. In this way it avoids probate much like a Living Trust. While probate in Washington isn't bad, if you can avoid it with a simple document like a community property agreement (unlike a Living Trust Agreement) and it makes sense with your estate, you might want to explore it. As far as taxes, a Living Trust doesn't avoid estate taxes any more than a property drafted Will. A community property agreement may adversely effect those provisions of a Will or Trust that do reduce estate taxes so you should review your estate with an attorney well versed in estate planning.

Remember, I'm an attorney but I'm not YOUR attorney. Only a thorough review of your situation by a competent attorney after an attorney-client relationship has been established will result in an informed legal opinion.