View Areas of Practice for Probate, Real Estate, and More
Probate proceedings are intended to provide a mechanism for the orderly transfer of a decedent’s property while protecting those who might have an interest in the property, including heirs, beneficiaries, creditors, and taxing authorities.
Generally, the laws of Washington govern the proceedings. However, individual county superior court systems may have additional procedures designed to streamline the process in your local area.
The Janicki Law Firm handles all matters relating to probate.
A simple will provides that all assets go to the surviving spouse at the death of the first spouse. At the death of the second spouse, all assets go equally to the surviving children and/or their issue. It allows for the appointment of guardians for the minor children and the appointment of an executor and alternate executor. It does not avoid probate nor does it address taxes. It is a device, however, commonly used for smaller estates and especially those with minor children.
When utilizing a simple will, people should be careful of the differing situations if the spouses have children from previous marriages. Wills may always be revoked and changed over the years.
A more complex will that provides various distribution schemes including tax shelters which may become more complex to administer but are often necessary.
These wills are used to “pour” estates into a trust which is established in a separate document. They are generally used in combination with a Revocable Living Trust. They provide a safety-net, which states that if an asset is unintentionally left outside of a trust, the pour-over will pass the asset into the trust.
It is created and operated during the lifetime of the drafter, and commonly for the benefit or support of the grantor and the grantor’s spouse. It is popular because it may be utilized to avoid probate, since all of the assets are transferred out of the grantor’s name during his or her lifetime and into the trust.
The cost savings represented by probate avoidance may be eaten up. However, in creating the trust and transferring assets into the trust, especially, if an institutional trustee serves for a long period of time, if the grantor acts as trustee, it will help keep the costs down. He or she then would appoint a competent individual to take over as successor trustee upon death or incapacity.
The living trust may provide that upon the death of the first spouse, the trust is divided into two shares. One, irrevocable and naming other family members as remainder beneficiaries. The other revocable one is for the benefit of the surviving spouse.
When transferring funds into a trust, capital gain taxes, income and estate taxes may be relevant. Probate avoidance may not save money in many situations.
An irrevocable trust may not be revoked after its creation. All irrevocable intervolves (i.e. “living”) arrangements involve loss of control, and there is always some risk, unless there is an exceptional family unity. Such trusts are sometimes used to avoid creditors, qualifying for state or federal assistance and for tax planning.
Also known as a bypass/credit trust, or exemption equivalent trust, it is an estate planning tool whereby a deceased spouse’s estate passes to a trust rather than to the surviving spouse, thereby reducing the likelihood that the surviving spouse’s subsequent estate will exceed the estate tax threshold.
Typically, the surviving spouse is given a life estate in the trust. Such trust is commonly used for estates subject to estate taxes. The tax exemptions have changed significantly over the years. Please call for current exemptions.
The Bypass Trust allows spouses to maximize two (2) exemptions from estate taxation by taking advantage of both spouses’ exemptions; the maximum amount can be passed to the couple’s children or alternate beneficiaries.
A marital deduction trust is a testamentary trust created to take full advantage of the marital deduction provisions of the Internal Revenue Code. This can be set up either through a will or through a Trust Agreement.
An educational trust may be testamentary or living. However, most simple Wills with trust provisions for the children set aside assets for the purpose of college education for the children. Commonly the testator will divide his estate among his children, placing into trust his children’s shares for the purpose of health, maintenance, support and education.
The primary purpose may be education. In Washington State, if the assets are not transferred into a trust for management by a trustee and for purposes identified by the testator, the children are entitled to all of the estate assets at age eighteen (18). It is critical that parents and guardians establish trusts to limit the income streams or lump sum payouts to their children at age eighteen (18). Even in small estates there may be substantial life insurance which will go automatically to the children at age eighteen (18) without trust provisions.
The primary purpose of using an ILIT is to exclude the policy proceeds from taxation in the estate of the insured and the insured’s spouse. This can be accomplished with the surviving spouse deriving certain benefits from the trust while living.
The trustee is generally given authority to purchase assets or loan to the estate of the survivor spouse. Usually, an unfunded ILIT will rely on gifts from the trust grantor to provide the funds necessary to pay future premiums. Such gifts may be subject to gift tax when exceeding the current annual exclusions. The use of Crummey powers are necessary to maintain the gift of a present interest.
An irrevocable trust, testamentary or intervolves, which pays to one or more beneficiaries, at least one of which is not a charity, for a number of years, a specified amount.
At the trust termination, the remaining assets are designated for one or more charities. A common charitable remainder trust is a Charitable Remainder Annuity trust which provides for the annual distribution to a non-charitable beneficiary or beneficiaries a fixed amount, not less than five (5%) percent of the initial value of the trust property. The remainder must be held by a qualified charity.
Such trust enables the donor to claim annual gift tax exclusion with respect to a transfer of property into a discretionary trust. The beneficiary of the asset has a non-cumulative power to withdraw property transferred into the trust. Such a power is named after Crummey v. Commissioner (1972), which allowed an annual gift tax exclusion for assets transferred to a discretionary trust for a minor.
For gift tax purposes, a trust wherein all the property consists of a residence to be used as a personal residence by persons holding term interest in the trust. It is created by and for individuals and their families in contrast to business or charitable trusts.
Appointments/Definitions regarding Trusts
With a revocable living trust the “Trustor” is the person (or persons) who creates the trust. Any competent adult can establish a revocable living trust. Husbands and wives can establish a trust together, and can provide that their community and separate property assets be held in different accounts.
When creating a trust clients take two steps. First, sign the written agreement or declaration. Then, legally transfer all trust assets to the trustee. In most cases my client is both the trustor and the trustee.
In Washington, any competent adult can be the trustee, including the person setting up the trust. More than one trustee may be appointed, and clients may delegate different duties to each trustee, and can retain the power to remove the trustee and appoint a new one. Appointing an alternate is essential.
The Trustors are generally the beneficiaries of the trust estate so long as they are alive. If they become incapacitated, they will still be the beneficiaries, but the successor trustee(s) will act as trustee. The successor trustee will make sure all finances are handled properly.
A testamentary trust is created within a will or revocable living trust. It is in contrast to a living trust which is created and funded by the grantor during his lifetime. A testamentary trust does not take effect until the death of the grantor. Testamentary trusts are popular because nothing must be transferred at the creation of the document. There may be capital gains savings in leaving the property out of the trust; however, the estate normally will not avoid probate nor will it avoid estate tax consequences
Advanced Tax Planning
Family partnerships, such as limited partnerships, and limited liability companies, have been used for a wide variety of tax and non-tax purposes. The partnership consists of family members which includes only a spouse, ancestors, lineal descendants, and any trust for the benefit of such persons.
A “regular partnership interest” is similar to that well understood by those dealing with a normal type of partnership in its typical structure which is a pro rata sharing of income, including loss and capital or any other allowable allocation.
The family partnership may have income tax advantages over corporations because the partnership, unlike a corporation, is not a tax-paying entity. Instead, the partnership is a conduit through which the income flows to the partners currently.
The grantors may contribute selected assets to a family partnership. They would be the “general partner” retaining ownership by holding general or limited units. They would gift limited partnership units to each of their children and grandchildren.
On the negative side, however, the use of a family partnership involves some tax risks because of the lack of certainty regarding the lack of application of some income, gift and estate tax rules. Family partnerships are subject to close scrutiny by the Internal Revenue Service because of their potential for abuse.
LLCs are used for planning, discounting value, retaining control and sheltering assets.
They must be maintained separately with annual filings to be effective. They require certificate of formation and subsequent filings with the State. An operating agreement or agreement clarifying practical aspects is necessary from a management perspective.
A limited liability company (LLC) has the liability protection of a corporation but the tax status of a partnership. In other words, while you get liability safeguards similar to those of a corporate shareholder, you pay taxes on the personal rate on your share of the profits or use the loss to offset other income.
While an LLC has many of the same characteristics as an S corporation or a limited partnership, it is, in many cases, more flexible. For example, it is possible to use an LLC: to bypass the restrictions on S corporation ownership, to allocate profits differently from ownership interests, or to avoid the general partner’s personal liability in a limited partnership.
Filing to form an LLC can be extremely complicated, and the paperwork needs to be completed meticulously, so you probably want to hire an attorney to help you. You need to follow the state rules that govern formation of an LLC in your state, and file the proper forms with the correct state bureau. You also will need to observe IRS guidelines in your LLC operating agreement (governing the relationships and responsibilities of the LLC owners) so that you qualify for taxation as a partnership rather than a corporation.
Limited partnerships are typically used for real estate investing or in situations where a business is looking to finance expansion. For most small businesses, forming a general partnership or an S corporation will meet their needs.
In circumstances where they are appropriate, limited partnerships provide many of the benefits of partnerships and corporations. They provide a way for small businesses to raise money without taking in new partners, forming a corporation, or issuing stock.
A limited partnership must have one or more general partners, who have the same responsibilities and liability restrictions as they would in a general partnership. In addition, there are one or more “limited” partners, typically investors not involved in the day-to-day activities of the company.
These limited partners are not personally liable for debts of the partnership, and they get the same tax advantages as a general partner. However, they do have significant restrictions. They cannot, for instance, be involved in the management of the company (with few exceptions). If they are, they may become personally liable for the partnership’s debts.
Creating a limited partnership can be as complex and costly as forming a corporation. It is advisable to hire an attorney as the filing requirements and business maintenance requirements must be diligently followed.
Powers of Attorney & Directive to Physicians
Commonly called “Living Will”, it is a letter of instruction to a physician which states that the signer does not want to have his or her life artificially prolonged if he or she is in an irreversible, vegetative state and diagnosed with a terminal condition, where the application of artificial support only prolongs death and cure. It must be witnessed and signed. These are highly encouraged.
There are Special Powers of Attorney and General and Durable Powers of Attorney. In a General and Durable Power of Attorney, the signer appoints another person to make decisions for the signer in the event of incapacity or immediately in the areas of health care and/or finances.
A Special Power of Attorney is used for special situations such as sale of property or decision making for a specified time period. Most people need a Power of Attorney for Health Care and Financial Decisions. These are very important and strongly recommended.
If a person becomes incapacitated and does not have a POA, generally family members must proceed with a legal action through Guardianship to make decisions. Guardianships are not only intrusive, but also expensive and court monitored.
A Power of Appointment is conferred by one person by Deed or Will upon another (called the “Donee”) to select persons who are to receive and enjoy an estate or income from an estate after the testator’s death or the donee’s death.
Premarital & Property Agreements
Agreement between parties designating how their property is characterized – separate, community, or mixed. Even if a marriage is not anticipated, community property is presumed in WA in many cases, so property agreements are often necessary to avoid the presumption of “community property.”
People should be advised against co-mingling inherited assets until they are advised legally of the implications. Please call Catherine to discuss these important matters.
Community Property Agreements are used to avoid probate at the death of the first spouse. Washington, a community property state, allows the surviving spouse to file a Community Property Agreement stating that all assets are community property and therefore should go automatically to the surviving spouse at the death of the first spouse.
Since 1991, The Law Office of Catherine Janicki has represented clients experiencing difficulties in transferring ownership of real property due to defects in title of the property. Many difficulties arise from improper attention to detail and follow through in past matters. Our office has direct access to documents recorded in King, Pierce and Snohomish County; this enables our office to quickly analyze your issue and devise a proper solution to your matter.
Our office has represented dozens of sellers and buyers in negotiating purchase and sale agreements. Our experience in drafting and negotiating purchase and sale agreements enables you to receive precise legal representation.
When you wish to secure your interest in an investment or personal loan to a private party; the Janicki Law Office is proficient in drafting and recording necessary deeds of trust and promissory notes to ensure your interest is safeguarded.
There are times when over the fence agreements are neglected and legal action is necessary. Adverse possession, claims against neighboring property owners or other issues are becoming all too common in today’s neighborhoods.
Knowledgeable advice, timely response and professional conduct are attributes you can expect from the Janicki Law Office when we represent you in defending your property rights.
The Janicki Law Office can assist you in several aspects of property management. Our office is currently active in managing several properties in King, Pierce and Snohomish County. Whether you need to have your lease agreement reviewed or complete management of your property, our office is poised to render our professional assistance.
Vulnerable Adult Protection (VAP) Petitions. Any petition protecting a vulnerable adult shall be filed as a civil matter separate from any guardianship matter.
If there is an existing guardianship case when the VAP is filed, a copy of the protection order may be placed in that file. Protection for elderly from solicitors and sometimes family members or others is available through the court. We have secured thousands of dollars returned to our clients from ruthless solicitors who prey on vulnerable adults.
Certain matters are particularly important with our elderly friends and relatives. Vulnerability can set in and protections are sometimes necessary. Guardianship and protection for vulnerable adults are necessary when people are not making sound decisions and need assistance. Mechanisms exist; some requiring court involvement.
Guardianships are necessary when a person has not nominated someone through an effective power of attorney. Through a guardianship the Washington guardianships are governed by court rules. A hearing is set to determine if the person seeking guardianship is qualified and if the alleged incapacitated person actually needs protection and help through a guardianship.
No. A will disposes of assets but it does not avoid probate. Some estates are subject to probate and some are not. It depends mostly on the assets owned by the decedent. If you own real estate of any value or financial accounts over the statutory amount your estate will go through probate regardless of whether or not you have a will.
Probate is a court process where after death the will is filed with the court and presented to a judge or commissioner for approval and authority to administer the estate. An executor has no authority until a court order is entered.
The process then requires publication, notices, inventory and/or appraisement, legal declarations regarding administration, in some cases bond, and other statutory requirements. Probate allows creditors and heirs rights regarding the executor’s actions, validity of the will and distribution of the estate. If you have assets in other states, ancillary probates are often required, running up costs.
In most cases probate may be avoided fairly easily with proper estate planning.
It is a personal decision depending very much on individual situations. I find most people want to avoid it to save time, money and inconvenience. It is a decision which in some cases should be discussed with the person you appoint as your executor.
It usually costs a little more to set up your estate to avoid probate, but it is far less than the cost of probate in the long run. Probate in Washington is not nearly as bad as some states. No, the attorney’s don’t take a percentage. No, the state doesn’t take a percentage.
In most cases, a payable on death beneficiary takes precedent over the will designation. However, to avoid litigation, clarity and consistency are critical in planning.
I’ve seen many bad and defective forms trusts and wills over the years. Usually they end up costing the family more in legal fees and time because of their ambiguous or unwanted provisions.
What is the example of a true example of bad will form
June had a form-will prepared where she basically “filled in the blanks.” The will cut out her children and attempted to leave everything to a friend, Nancy and others.
I scrutinized the will and found two of the provisions, if taken literally and formally, they were somewhat inconsistent and ambiguous. It showed confusion around June’s intent and the position of the “executor” vs. “beneficiary.”
Rather than challenge the will, I petitioned the court to probate the estate with adjudication that June died without a valid will that forced Nancy to try to probate the will. The court appointed my client, June’s son and the will was never admitted to probate. I still don’t know what June actually wanted, but we had to use other evidence and the statutes to try to piece it together.
Many times over the years I’ve reviewed revocable living trusts where a couple went to a seminar and for a certain sum (about the same that they’d pay to a legitimate attorney) they emerge with a nice looking incomplete package of docs.
Currently, I’m working on one such estate where some of Rosa’s Revocable Living Trust documents. The document states she has only one child (she has three) and her second husband has no children (he had four). Obviously, a whole host of problems resulted from bad drafting and lack of review. But more harmful is Rosa’s trust provides for mandatory divisions of the estate at her husband’s death which are difficult for her to manage, expensive and completely unnecessary given the size of her estate.
Her kids are spending a lot time and money trying to undo bad documents. Of course it isn’t easy and might be in the long run too expensive so Rosa may be stuck with a division of an estate which she worked all of her life to grow. Not to mention she is completely restricted in her use of her own assets.
Revocable living trusts have become a popular alternative to the traditional Washington will as a way to pass property at death. A revocable living trust is an arrangement for management and distribution of property. Like a will, the trust is “revocable,” meaning that it may be modified or eliminated it at any time.
These trusts are established by a written agreement or declaration which appoints a “trustee” to administer the property, and which gives detailed instructions on how the property is to be managed and eventually distributed.
To avoid probate the trustor should transfer substantially all property to the trustee. A revocable living trust agreement or declaration is usually longer and somewhat more complicated than a simple will.
The benefit to a trust is that it remains private in most situations, it is generally more difficult to challenge, and it is easier for the administrator to step into the shoes of the decedent without going through a court process. It is also much cheaper to administer a living trust in most situations than to go through a probate. The drawback to a trust is it is sometimes more expensive to set up initially, the trustor needs to transfer all probate assets into the trust after it is signed and occasionally it requires a new tax identification number.
A will disposes of property and assets, however, if an estate is over $100,000 in value or consists of real estate (a home, vacant land, mobile home, real property) the will generally has no effect until it is admitted to probate. Probate is a court process where the executor petitions the court for authority to administer the estate (pay all expenses, liquidate assets, distribute assets and close the estate).
Through a Revocable Living Trust, the Trustor may establish a Credit Shelter Trust, Educational Trust, Trust for Minors and other type of Trust.
No. A will is effective only at death and may be changed or revoked at any time before death. A will should be revised to reflect any changes in circumstances, personal choices or resources. Changes are often made by a simple document called a codicil (a supplement to a will), or by redrafting the will. An attorney should be consulted when making changes to ensure that changes are legal and properly made.
A will should be reviewed and updated as conditions and circumstances change. For example, changes may be necessary when:
A will is valid until legally revoked or changed, and becomes final or effective upon its maker’s death. In the event of a divorce, a will automatically excludes the former spouse unless it expressly states otherwise. (Complications could result, however, if no property settlement agreement of the divorce exists.) Periodic reviews are important to make sure the will conforms with the changing laws—as well as the will-maker’s intentions
The signed original document should be kept in a safe place. As with all vital papers, this document should be stored where it is protected (such as a bank’s safe deposit vault), yet readily accessible when needed. In Washington, the safe deposit box of the deceased is not sealed, so someone who has access to the box can get the will. Arrangements should be made for the will to be immediately available to the decedent’s executor.
A copy of the will that notes the location of the original document, and a letter of instruction that contains numbers for bank accounts, insurance policies, credit cards or other financial details, should also be prepared. The letter may also contain instructions regarding burial, cremation or anatomical gifts, and should be given to the executor or will-maker’s attorney. Because this letter may function as a plan for handling important estate matters, it should be as complete as possible.