Ensuring a Surviving Spouse Adheres to a Mutually Agreed-Upon Estate Plan
Posted Tuesday, May 15, 2012 by John S. Palmer
It is common for married couples to execute reciprocal Wills leaving all assets to the surviving spouse, and stipulating that after both spouses are deceased, all remaining assets are to be divided equally among their children.
If the parties have children from a prior relationships, the spouses could set up a common estate plan like this, but a surviving spouse would be free to later change his or her Will to favor his or her children, or even a new spouse, over the children of the deceased spouse. This could be particularly unfair if the deceased spouse brought substantial separate assets into the marriage.
One way to address this issue is for the spouses to execute an agreement stating that the reciprocal Wills cannot be modified or revoked except by mutual agreement of both spouses, and become irrevocable upon the death of the first spouse. Such agreements are valid and binding in the State of Washington, and can ensure that assets acquired before the first spouse’s death are distributed according to the common estate plan. The agreement may permit a surviving spouse to execute a codicil designating different beneficiaries (such as a new spouse) to inherit assets acquired after the death of the first spouse, and may contain a provision permitting other changes to the common estate plan if all affected parties agree, including the children who otherwise stand to inherit.
A spouse may also execute a Will placing his or her share of the marital assets (and/or any separate property) in a testamentary trust that makes these assets available to help pay a surviving spouse’s living expenses, while ensuring any remainder goes to the deceased spouse’s children. Typically, someone other than the surviving spouse would serve as the trustee.
Alternatively, for couples who elect to use a Revocable Living Trust as their primary estate planning document, a new statute in Washington (RCW 11.103.030, effective January 1, 2012) provides:
If a revocable trust is created or funded by more than one trustor and unless the trust agreement provides otherwise: (a) To the extent the trust consists of community property, the trust may be revoked by either spouse or either domestic partner acting alone but may be amended only by joint action of both spouses or both domestic partners; (b) To the extent the trust consists of property other than community property, each trustor may revoke or amend the trust with regard to the portion of the trust property attributable to that trustor’s contribution; (c) The character of community property or separate property is unaffected by its transfer to and from a revocable trust; and (d) Upon the revocation or amendment of the trust by fewer than all of the trustors, the trustee shall promptly notify the other trustors of the revocation or amendment.
These provisions limit one spouse’s ability to amend a Revocable Living Trust created by both spouses, at least with respect to the beneficiaries who will inherit assets contributed to the trust by the other spouse.
If you have any questions or would like to schedule an appointment, please call us at (425) 455-5513, toll free at (877) 455-5513, or info@palmerlegal.com.