George Robertson, CFP, CRPS, AIF

If you are a trustee, or work with a trustee in the state of Washington, you'll want to know about significant changes as of January 1, 2012 that may affect you.

For more details, please refer to Chapter 11.106 RCW Trustees' Accounting Act.
For the complete state law, please see Title 11. RCW - Probate and Trust Law.

Memo

Law Office of Douglas J. Engel

Date: February 28, 2012

Douglas J. Engel
1200 5th Ave., Suite 1550
Seattle, WA 98101
Phone: 206-340-4850
Email: djengel@djelaw.com
Fax: 206-728-5863
www.djelaw.com




White Paper on Selected 2012 Trust Statutes

If you work with trustees as their accountant, broker, financial advisor, or lawyer, you will want to know about major changes to the trust statute beginning this year.

The Washington State Legislature substantially changed the notice and reporting requirements for trusts. The changes described in this paper to do not apply to revocable living trusts until those trusts become irrevocable. This paper addresses the reporting changes that apply to trustees, but does not cover all of the changes in the trust law. The large commercial trust departments will undoubtedly have systems in place for compliance. However, if you are an accountant, broker, lawyer, or someone who works with trustees, you may just now be learning about these changes, and trustees who are not aware of the changes will be grateful to you for drawing their attention to the new provisions. You may want to suggest that trustees work with their advisors to comply with the new law. Furthermore, the new requirements, especially the reporting requirements, may impact the services you perform for trustees.

NEW REPORTING REQUIREMENTS FOR EXISTING TRUSTS

The new law requires that the trustee keep persons interested in the trust reasonably informed about the administration of the trust, and of the material facts necessary for the beneficiaries to protect their interests. The statute sets forth items in a report, which if offered to the interested persons should satisfy the trustee's duty to keep the persons reasonably informed:

  1. A statement of receipts and disbursements of principal and income that have occurred during the accounting period;
  2. A statement of the assets and liabilities of the trust and their values at the beginning and end of the period;
  3. The trustee's compensation for the period;
  4. The agents hired by the trustee, their relationship to the trustee, if any, and their compensation, for the period;
  5. Disclosure of any pledge, mortgage, option, or lease of trust property, or other agreement affecting trust property binding for a period of five years or more that was granted or entered into during the accounting period;
  6. Disclosure of all transactions during the period that are equivalent to one of the types of transactions described in RCW 11.98.078 [regarding conflicts of interest] or otherwise could have been affected by a conflict between the trustee's fiduciary and personal interests;
  7. A statement that the recipient of the account information may petition the superior court pursuant to chapter 11.106 RCW [regarding accounting] to obtain review of the statement and of acts of the trustee disclosed in the statement; and
  8. A statement that claims against the trustee for breach of trust may not be made after the expiration of three years from the date the beneficiary receives the statement.

If a person entitled to notice under this section requests information reasonably necessary to enable the notified person to enforce his or her rights under the trust, then the trustee must provide such information within sixty days of receipt of such request. Determining who is entitled to the notice and reporting rights can be complex and depends on the circumstances of the trust.

STARTING THE CLAIM LIMITATIONS PERIOD

A related section of the law says that a report that includes the above information is presumed to have provided sufficient information for a beneficiary to know the existence of a potential claim for breach of trust, and thus will start the running of the time period after which the claim will be barred by the statute of limitations. This will be helpful to trustees.

ADDITIONAL TRUST CHANGES

The new trust laws have additional changes not discussed in this paper. Some, but not all, of the additional changes are: notice requirements when a trust becomes irrevocable; correction of mistakes in the trust; creation of trusts; location of the trust; certification of trusts; registration of trusts; duties of trustees; and a new chapter on revocable living trusts.