Often called a Personal Property Affidavit or Small Estate Affidavit, the Revised Code of Washington sets forth a procedure for individuals with small estates to avoid probate procedures. A Small Estate Affidavit allows a resident to avoid probate using a statutory form if their assets do not exceed $100,000 and only include personal property. In this case, a Washington State resident can devise all of their personal property using the Small Estate Affidavit without going through probate. A resident with more debts than assets cannot use the affidavit to convey property and avoid their creditors. As such, if you are a Washington State resident without real property and your net worth is $100,000 or less, you can use the statutory form if you take care of your debts owed to creditors.

According to the Washington Revised Code, personal representatives or executors of a decedent’s estate must strictly comply with the statute triggering the limited period for creditors to make claims against the estate. Failing to comply with the strict statutory requirements may give creditors up to 24 months to make their claims and prohibit you from making distributions to heirs for the entire period.

The Washington Legislature passed the Creditor’s Claims Law that allows creditors to receive their debts within a relatively short period thereby allowing heirs to receive their inheritances quicker. Without the statutory provision, creditors would have 24 months to make their claims for unpaid debts after a decedent’s death. With the statutory provision, creditors have only four months to claim their debts after the estate publishes a Probate Notice to Creditors in a local newspaper of general circulation. Whereas before the state passed this statute, heirs had to wait at least 24 months to receive their inheritances, they are only required to wait four months after the state passed this statute. Creditors have up to four months to perfect or make their claims for unpaid debts against estates.

You can contact our office to schedule an appointment to discuss your estate planning options and potential claims from creditors. We can help you determine if you can take advantage of the Washington State Creditor’s Claims Law.

Most decedents in Washington State are solvent when they pass away and are able to pass at least some of their assets to their heirs and beneficiaries. If your spouse or other loved one dies away without any assets, you may be required to pay creditors for joint debts. However, you are not typically responsible for a decedent’s existing debts without a contractual promise to pay for them. You are not typically required to open a probate case on your insolvent loved one’s behalf without a liability to pay for their debts.

If you are a personal representative responsible for repaying creditors and distributing a decedent’s assets, you may be able to circumvent the normal timeframe of 24 months to repay creditors. By circumventing the 24-month period, you can distribute the decedent’s assets quicker and ask for a personal discharge of your legal duties relatively quickly. Typically, you will have to publish a Notice to Creditors and give the creditor actual written notice of the decedent’s death to trigger the expedited time allowable to file a claim for an unpaid debt.

If you decide that drafting a will and incorporating a specific bequest made to someone whom you trust can effectively address your concerns, you should make sure you leave this person enough money to take care of your pet. You can provide your beneficiary with a generous bequest to address your pet’s needs. By providing your beneficiary with a significant monetary or property bequest, you may be giving him extra incentive to take personal responsibility for the care of your animal.

Although a beneficiary to your will may not have to follow any written directives, you may feel better providing this individual with specific directions or instructions as to how he should properly address your pet’s medical and feeding needs. If your pet has special dietary restrictions or requires special veterinary care, you should leave detailed instructions for your pet’s caretaker.

Trusts are also useful estate planning tools for certain individuals. For example, if you have a niece who loves to spend money gambling, you may think twice before leaving a significant bequest to her since you may be afraid that she will throw her money away in casinos pretty quickly. However, if you create a trust for her, you may be able to control how much money your trustee gives her to ensure she will not dissipate her inheritance too quickly. As the beneficiary of your trust, your niece will be responsible for paying income taxes on her trust income. However, trusts must pay separate income taxes. Similar to the separate entity rules regarding corporations and shareholders, the IRS considers trusts as separate entities, and trusts retaining property in excess of the federal tax limits will have to pay income taxes on the retained income.

You can create a revocable or irrevocable living trust. An irrevocable living trust is one that is not modifiable. You cannot change the terms of an irrevocable trust instrument or change your beneficiaries. However, if you create a revocable living trust, you can change the terms your trust document or revoke the entire instrument. Although a revocable living trust is more flexible than an irrevocable living trust, you may be able to reduce your tax liabilities by creating an irrevocable trust. This is because the federal tax code considers a gift to an irrevocable living trust as property of the trust since you retain no control over its disposition. However, since you can change the disposition or beneficiary of a revocable living trust, you may not receive any tax benefits. Carefully considering tax implications is an important part of estate planning.

Your estate planning attorney will help you plan for the care of your pets by drafting specific estate planning documents. Your attorney will help you reference your animals and make specific provisions for them in your will. Your attorney may also recommend that you set up a Testamentary Guardian Trust by naming a person whom you trust to take care of your pet. Your attorney may set up a testamentary guardian trust through your will by naming a guardian to take care of your animals. You can also include a specific provision in your will to ensure your pet will be taken care of after your death. You can find a humane society or adoption group that will take over your animal’s care after you die. If you are unable to locate a trustworthy guardian, you may want to consider asking for help from a humane society.

The person you name as your pet’s guardian or caregiver should be someone you trust and will take the responsibility seriously. If you trust this person to properly care for your pet and to use the extra money to care for your pet, instead of for his own personal gain, including your animal in your will may be a great solution. However, if you want to make sure that someone will be personally responsible for taking care of your pet after you die, you can set up a trust.

You can name an alternate guardian or caregiver who will be able to serve as the primary if the original appointment is unable to serve or is too ill to take care of your pet. Your guardian will be responsible for caring for your animal by providing it with food and medical care. Your trustee and guardian may be the same person, as long as this person is at least 18 years old.

In limited situations, some trusts are never required to file tax returns. The trust tax return is IRS Form 1041, U.S. Income Tax Return for Estates and Trusts. Contrary to popular belief, an individual cannot impute his tax liabilities to a trust for federal income tax purposes. Because the IRS prohibits assignments of income, individuals are still liable for their income taxes even where their incomes go directly to their trusts.

Non-Tax Revocable Living Trust Benefits

• Staying in control of your assets, though disability planning.  This avoids court interference and saves time, money, and hassle, while keeping your private affairs private.
• Choosing who will help you with financial matters should you become disabled and when you die.
• Protecting and planning for your family, including your spouse, children, grandchildren, and pets.  This means giving what you have to who you want, when you want, and how you want.
• Protecting your children from unintentional disinheritance.
• Providing for a special needs beneficiary, without disqualifying him or her from receiving governmental assistance.
• Protecting an addicted or spendthrift beneficiary.
• Protecting inheritances from court interference by creating trusts for minors and naming a succession of trustees for all beneficiary trusts.
• Creating a common trust for minor children so they receive the same support and footing as older siblings, just as you would in a family.
• Protecting your loved ones’ inheritances from creditors, divorcing spouses, and predators.
• Including incentive trusts to encourage family legacies.
• Avoiding probate; thus saving time, money, hassle, and keeping family and financial affairs private.

Though saving taxes is what drives many clients through their estate planning attorney’s door, they are happy to discover an entire list of non-tax reasons estate planning, specifically, revocable living trust planning is right for them.