Chapter D. Inter Vivos Trusts

• Jurisdiction: Washington

D INTER VIVOS TRUSTS

D.1. In General

One of the most common of modern will substitutes, especially since attempts to avoid probate became widespread, is the inter vivos trust, which permits a transfer of property during the transferor's lifetime, but with the retention by the transferor of substantial rights and powers, almost as though the instrument were a will. The advantage, of course, in addition to avoidance of probate and related procedures, is the lack of a need to satisfy all of the formalities of a will.

As long as the trust passes some present interest to the beneficiaries, it is not considered to be testamentary, even if the settlor retains

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the power to revoke or modify its terms, or to retain possession or receive income for his lifetime, or other incidents of control.¹³⁴ It is only when the settlor retains virtually complete ownership and control of the trust property until death (in a nonfiduciary capacity) that the trust might be considered testamentary, and then the jurisdictions are split, with a majority still upholding the trust as nontestamentary¹³⁵

D.2. Washington Law

In Washington, once a trust agreement is valid as a trust it is not rendered testamentary by the designation of a beneficiary in a subsequent will or other instrument;¹³⁶ and pour-over provisions in wills, which pass a testator's assets to an already-established inter vivos trust, are valid and nontestamentary¹³⁷

A few miscellaneous points from Washington cases are of note. Like other instruments that purport to convey an interest in real property, inter vivos trusts of real property must be in writing.¹³⁸ An inter vivos trust cannot be used to avoid the community property laws that would apply to a will.¹³⁹ And a revocable inter vivos trust that, according to the court, had the same "practical effect" as a will, with the beneficiary's enjoyment postponed until the death of the settlor, was held to be subject to the Washington antilapse statute when the beneficiary had predeceased the life tenant/settlor.¹⁴⁰

D.3. Trusts for Animals

At common law, an "honorary trust" is a transfer to a third party for such purposes as taking care of the transferor's pets after his or her death or maintaining the transferor's grave. It is not a true trust in that there is no person to enforce it, but it is not a gift because it is

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not intended to benefit the transferee.¹⁴¹ To the extent such "trusts" are permitted, the transferee is on his or her "honor" to carry out the trust, and only if the...