Absent a significant change in life circumstances (e.g., the death, disability or desired disinheritance of a current heir), I advise clients to review their estate planning documents every three to five years. The purpose of the review is not to determine whether changes in state or federal law necessitate revisions to the documents (those items should be monitored by your estate planning attorney), but rather, to ensure that the fiduciaries you have appointed to act upon your death and the bequests you have made to your beneficiaries still accurately reflect your wishes.
Despite such advice, I am dealing more frequently in probate and trust administration matters with difficult issues that could have been resolved in a more efficient and cost-effective manner prior to death if the client had taken a half hour to review their estate-planning documents. In order to ensure that your family is not faced with expensive legal issues after your passing, here’s five common items to focus on when reviewing your estate planning documents.
Appointment of fiduciaries
The fiduciary you appoint to act under your will is called the personal representative (in Washington.) The fiduciary you appoint to act under your trust is called the trustee. The fiduciary you appoint to act on your behalf under a durable power of attorney document is called your agent or attorney-in-fact.
For each of these documents, I highly recommend that you appoint at least two successor persons to act, in the event your primary fiduciary is unable to serve. In the event there is no nominated person able or willing to act, your family will likely need to seek court intervention in order to approve the appointment of an alternate fiduciary.
In addition, you should think long and hard about whether the persons you have appointed are still able and willing to act. If you appointed your family friend from 20 years ago to act as successor trustee, but they moved out of state 10 years ago, you likely will want to change this provision. If you are elderly and have appointed personal representatives under your will that are your same age or older, you should consider younger persons that are less likely to predecease you or be unable to act due to health issues.
Governing law provisions
There is likely an article in your will or trust labeled “administrative provisions” or “miscellaneous provisions.” That provision likely has a section named “governing law” that reads something like this: “The provisions of this will shall be construed in accordance with the laws of the state of Washington, regardless of my domicile at the time of my death.” In the event there is an issue regarding the administration of your will or trust, the laws of the state identified in the “governing law” provision will apply.
If, when reviewing the “governing law” provision in your estate planning documents, you notice that the state listed is not the state that you currently reside in, circle the provision and contact an estate planning attorney licensed to practice in your current state of residence. Estate planning, probate and trust law varies in each state, and it’s important that your documents have been reviewed by an attorney in your current state of residence.
Purchase terms
For estates or trusts that contain real property, it is not uncommon to find provisions that allow a beneficiary to “buy out” the interest in real property of other beneficiaries upon the death of the testator or trustor. Often, these provisions will have detailed language regarding how the purchase price and payment terms are to be calculated if the “buy out” option is elected. Depending on the date of the instrument, the purchase price and the payment terms may be wildly out of date. For example, I recently reviewed a trust instrument that permitted a beneficiary to purchase his siblings’ interest in certain real property pursuant to the terms of a promissory note. Unfortunately, the document was drafted in the 1970s, and the interest rate on said promissory note was set at 15 percent. While that may have been a reasonable interest rate 50 years ago, it doesn’t work in 2021, and the effect of that provision ensured that no beneficiary would exercise the purchase option (likely not the result the trustor intended).
Restrictive trust provisions
Commonly, when an estate planning client has young children, they will provide that their assets will pass to a trust for the benefit of such child upon their passing. Usually, once the child becomes an adult, a revision will be made to the document removing the children’s trust and directing that such child’s inheritance passes to them outright. With older will and trust documents, I often find that no age limitation has been listed on this “children’s trust.” In a recent trust administration matter I was involved with, the three beneficiaries who received their inheritance “in trust” were all over the age of 70. I am near certain that the trustors’ intent when they executed the document 50 years ago was not to restrict their children’s inheritance until they were 80 years old. Any provisions containing testamentary children’s trusts or grandchildren’s trust should be reviewed closely.
Inadequate fiduciary authority
Clients often have preconceived notions about the difficulty and cost of probate administration. Usually these clients previously resided in a state with onerous probate laws (California and Oregon come to mind most often in the western U.S.) In Washington, the probate law allows for the maker of a will to grant his or her personal representative “nonintervention” powers. These nonintervention powers allow a personal representative to efficiently administer a will in Washington without the supervision (and increased cost) of a court. In reviewing the personal representative provisions of your will, look for language that references nonintervention powers or language about “independent administration.” If these provisions are not currently included in your will, you should strongly consider adding the necessary language in consultation with your estate planning attorney.
William O. Etter is a tax attorney that specializes in estate planning, probate and trust administration in the Spokane office of Foster Garvey PC. He has previously served on the executive committee of the Real Property, Probate, and Trust section of the Washington State Bar Association and can be reached at (509) 777-1600 or at
william.etter@foster.com.
