August 2021
The Trust and Estate Dispute Resolution Act establishes the process Washington uses to resolve estate and trust conflicts. The state strives to mediate these issues outside of court. Understanding the key tenets of TEDRA can help inform your estate plan or guide the next steps when you have a dispute about a family member’s estate. Issues resolved by TEDRA Some of the estate and trust situations that fall under TEDRA jurisdiction include the following: A person dies without a will and family members disagree about intestate succession Suspicion of invalid asset transfers Estate claims by a creditor or third party Estate claims by a survivor left out of a will Questions about whether a will exists or is valid Questions about the deceased person’s competence when making or changing a will. TEDRA does not apply to probate matters. The TEDRA process TEDRA helps settle trust and estate disputes outside of court. Participants involved in this type of conflict can negotiate an independent agreement, undergo mediation or attend an arbitration. With mediation, a neutral party facilitates the negotiation process between the parties. During arbitration, a private judge hears each participant’s case and makes a decision. The process begins when someone files a Washington state TEDRA petition, which names other parties to the dispute. These parties will receive official legal service and have a chance to respond. The court may appoint representatives to act on behalf of children and others who cannot participate independently. Carefully weighing each option can help ensure TEDRA negotiations that serve the needs of all involved parties.
A lot of estate planning is for the purpose of avoiding probate or minimizing the amount of time that assets spend there. This makes sense: after all, if the assets are in probate they cannot benefit your beneficiaries. However, some gambits for avoiding probate are smarter than others. Some Americans wonder if putting an adult child or other responsible individual on the deed to their home is a good idea since it does involve skipping probate. However, according to InCharge, this is almost never a good idea . How does this help skip probate? Putting another adult on the deed to your home relies on “joint tenancy.” Essentially, if two adults hold a home in joint tenancy and one of them dies, the other gets the house automatically. The property does not go through probate. What are the pitfalls? Just because you put a loved one on the deed to your home does not necessarily mean that they will enact your wishes after you die. For instance, if you decide to put your responsible oldest child on the deed to your home with the stipulation that once you are dead they will sell the property and split it, this does not mean it will come to fruition. The child may choose to keep all of the money for themselves. Additionally, any property you hold jointly with somebody may be at risk if one of the owners is in trouble with the IRS. The IRS may choose to come after the house for unpaid taxes. For instance, if the IRS forces the sale of the property, both parties will get a part of the sale, but you will lose the home.
The majority of Americans understand the purpose of a will. However, fewer people are familiar with the role that living trust can play in a complete estate plan. The correct use of a living trust can help your heirs avoid probate, and in some cases may help your estate avoid estate taxes. According to Experian, the two major varieties of living trusts are revocable and irrevocable . The revocable trust The major benefit associated with revocable trust is avoiding probate. Probate is an expensive process and also happens to be part of the public record. Many Americans would prefer their heirs to have their inheritance right away, and not need to wait for years for assets to go through probate. Probate’s public nature is also off-putting too many. If you put things in a revocable trust they remain your personal property until your death. You can also make as many changes as you would like to a revocable trust until death. The irrevocable trust The main purpose of irrevocable trusts is to have whatever asset you put into the trust avoid estate taxes. Irrevocable trusts differ from revocable trusts in that anything you put inside of an irrevocable trust becomes the property of the trust itself. Additionally, you cannot make any changes to an irrevocable trust once you file the paperwork. Additionally, creditors cannot go after anything inside of an irrevocable trust since it is not your personal property once you place it in the trust. However, if the government finds that you created an irrevocable trust for fraudulent purposes there are penalties for this.
