BILL REQ. #:  Z-0990.4 

Read first time 01/16/2006.   Referred to Committee on Judiciary.

     AN ACT Relating to trusts and estates; amending RCW 11.104A.040, 11.104A.050, 11.108.010, 11.108.025, 11.108.060, 11.108.900, 11.95.070, 11.24.010, 11.24.020, 11.96A.030, 11.96A.100, 11.96A.110, 11.96A.150, 6.32.250, 19.36.020, and 11.62.005; adding a new section to chapter 11.108 RCW; adding a new section to chapter 11.96A RCW; adding a new section to chapter 11.95 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 11.104A.040 and 2002 c 345 s 106 are each amended to read as follows:
     (a)(1) In this section, "beneficiary" means a person who has an interest in the trust to be converted and who has the legal capacity to act in his, her, or its own right with respect to all actions that such person may take under this section.
     (2) In this section, "unitrust" means both a trust converted into a unitrust under this section and a trust initially established as a unitrust. Unless inconsistent with the terms of the trust or will, subsections (f), (g), (h), (i), and (m) of this section apply to the unitrust initially so established.
     (b) Unless expressly prohibited by the terms of the trust, a trustee may release the power to make adjustments under RCW 11.104A.020 and convert a trust into a unitrust as described in this section if all of the following apply:
     (1) The trustee determines that the conversion will enable the trustee better to carry out the intent of the settlor or testator and the purposes of the trust.
     (2) The trustee gives written notice of the trustee's intention to release the power to adjust and to convert the trust into a unitrust and of how the unitrust will operate, including what initial decisions the trustee will make under this section, to ((all beneficiaries)) each beneficiary who, on the date the notice is given:
     (i) ((Who are currently eligible to receive income from the trust)) Is a distributee or permissible distributee of trust income or principal; or
     (ii) ((Who would receive, if no powers of appointment were exercised, a distribution of principal if the trust were to terminate immediately before the notice is given)) Would be a distributee or permissible distributee of trust principal if the interests of the distributees described in (2)(i) of this subsection terminated and the trust then terminated immediately before the notice was given and if no powers of appointment were exercised.
     (3) There is at least one beneficiary under (2)(i) of this subsection and at least one other person who is a beneficiary under (2)(ii) of this subsection.
     (4) No beneficiary objects to the conversion to a unitrust in a writing delivered to the trustee within sixty days after the notice is given under (2) of this subsection.
     (c) The parties, as defined by RCW 11.96A.030(4), may agree to convert a trust to or from a unitrust by means of a binding agreement under chapter 11.96A RCW.
     (d)(1) The trustee may petition the court under chapter 11.96A RCW to order a conversion to a unitrust if either of the following apply:
     (i) A party, as defined by RCW 11.96A.030(4), timely objects to the conversion to a unitrust; or
     (ii) There are no beneficiaries under (2)(i) and (ii) of this subsection.
     (2) A party, as defined by RCW 11.96A.030(4), may request a trustee to convert to a unitrust. If the trustee does not convert, the party, as defined by RCW 11.96A.030(4), may petition the court to order the conversion.
     (3) The court shall approve the conversion or direct the requested conversion if the court concludes that the conversion will enable the trustee to better carry out the intent of the settlor or testator and the purposes of the trust.
     (e) In deciding whether to exercise a power to convert to a unitrust under this section, a trustee may consider, among other things, the factors set forth in RCW 11.104A.020(b).
     (f) After a trust is converted to a unitrust, all of the following apply:
     (1) The trustee shall follow an investment policy seeking a total return for the investments held by the trust, whether the return is to be derived:
     (i) From appreciation of principal;
     (ii) From earnings and distributions from principal; or
     (iii) From both.
     (2) The trustee shall make regular distributions in accordance with the terms of the trust, or the terms of the will, as the case may be, construed in accordance with the provisions of this section.
     (3) Unless expressly prohibited by the terms of the trust, the term "income" in the terms of a trust or a will means an annual distribution, the "unitrust distribution," equal to the percentage, the "payout percentage," that is no less than three percent and no more than five percent and that the trustee may determine in the trustee's discretion from time to time, or, if the trustee makes no determination, that shall be four percent((, the "payout percentage,")) of the net fair market value of the trust's assets, whether such assets would be considered income or principal under other provisions of this chapter, averaged over the lesser of:
     (i) The three preceding years; or
     (ii) The period during which the trust has been in existence.
     (g) The trustee may in the trustee's discretion from time to time determine all of the following:
     (1) The effective date of a conversion to a unitrust.
     (2) The provisions for prorating a unitrust distribution for a short year in which a beneficiary's right to payments commences or ceases.
     (3) The frequency of unitrust distributions during the year.
     (4) The effect of other payments from or contributions to the trust on the trust's valuation.
     (5) Whether to value the trust's assets annually or more frequently.
     (6) What valuation dates to use.
     (7) How frequently to value nonliquid assets and whether to estimate their value.
     (8) Whether to omit from the calculations trust property occupied or possessed by a beneficiary.
     (9) Any other matters necessary for the proper functioning of the unitrust.
     (h)(1) Expenses which would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust distribution.
     (2) Unless otherwise provided by the terms of the trust, the unitrust distribution shall be paid from net income, as such term would be determined if the trust were not a unitrust. To the extent net income is insufficient, the unitrust distribution shall be paid from net realized short-term capital gains. To the extent net income and net realized short-term capital gains are insufficient, the unitrust distribution shall be paid from net realized long-term capital gains. To the extent net income and net realized short-term and long-term capital gains are insufficient, the unitrust distribution shall be paid from the principal of the trust.
     (3) To the extent necessary to cause gains from the sale or exchange of unitrust assets to be treated as income under any federal, state, or local income tax (for example, section 643 of the Internal Revenue Code and its regulations, including Treasury Regulation § 1.643(b)-1, as amended or renumbered), the trustee has the discretionary power to allocate the gains to income, so long as the power is reasonably and impartially exercised.
     (i) The trustee or, if the trustee declines to do so, a beneficiary may petition the court:
     (1) To ((select a)) change the payout percentage ((different than four percent)).
     (2) To provide for a distribution of net income, as would be determined if the trust were not a unitrust, in excess of the unitrust distribution if such distribution is necessary to preserve a tax benefit.
     (3) To average the valuation of the trust's net assets over a period other than three years.
     (4) To reconvert from a unitrust.
     (j) Upon a reconversion, the power to adjust under RCW 11.104A.020 is revived.
     (k) A conversion to a unitrust does not affect a provision in the terms of a trust directing or authorizing the trustee to distribute principal or authorizing a beneficiary to withdraw a portion or all of the principal.
     (l) A trustee may not possess or exercise any power under this section in any of the following circumstances:
     (1) The unitrust distribution would be made from any amount that is permanently set aside for charitable purposes under the terms of a trust and for which a charitable deduction from a federal gift or estate tax has been taken unless both income and principal are so set aside.
     (2) The possession or exercise of the power would cause an individual to be treated as the owner of all or part of the trust for federal income tax purposes and the individual would not be treated as the owner if the trustee did not possess or exercise the power.
     (3) The possession or exercise of the power would cause all or any part of the trust estate to be subject to any federal gift or estate tax with respect to the individual and the trust estate would not be subject to such taxation if the trustee did not possess or exercise the power.
     (4) The possession or exercise of the power would result in the disallowance of a federal gift or estate tax marital deduction which would be allowed if the trustee did not have the power.
     (5) The trustee is a beneficiary of the trust.
     (m) If subsection (l)(2), (3), or (5) of this section applies to a trustee and there is more than one trustee or an additional trustee who is appointed by a court order, a binding agreement, or otherwise under chapter 11.96A RCW, a cotrustee to whom subsection (l)(2), (3), or (5) of this section does not apply may possess and exercise the power unless the possession or exercise of the power by the remaining trustee or trustees is not permitted by the terms of the trust. If subsection (l)(2), (3), or (5) of this section restricts all trustees from possessing or exercising a power under this section, the trustee may petition a court under chapter 11.96A RCW for the court to effect the intended conversion or action.
     (n) A trustee may release any power conferred by this section if any of the following applies:
     (1) The trustee is uncertain about whether possessing or exercising the power will cause a result described in subsection (l)(2), (3), or (4) of this section.
     (2) The trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in subsection (l) of this section.
     The release may be permanent or for a specified period, including a period measured by the life of an individual.

Sec. 2   RCW 11.104A.050 and 2002 c 345 s 201 are each amended to read as follows:
     After a decedent dies, and subject to chapter 11.10 RCW, in the case of an estate, or after an income interest in a trust ends, the following rules apply:
     (1) A fiduciary of an estate or of a terminating income interest shall determine the amount of net income and net principal receipts received from property specifically given to a beneficiary under the rules in Articles 3 through 5 of this chapter which apply to trustees and the rules in subsection (5) of this section. The fiduciary shall distribute the net income and net principal receipts to the beneficiary who is to receive the specific property.
     (2) A fiduciary shall determine the remaining net income of a decedent's estate or a terminating income interest under the rules in Articles 3 through 5 of this chapter which apply to trustees, except to the extent that the following apply:
     (i) The fiduciary shall include in net income all income from property used to discharge liabilities;
     (ii) The fiduciary shall pay from income or principal, in the fiduciary's discretion, family allowances; fees of attorneys, accountants, and fiduciaries; court costs and other expenses of administration; and interest on death taxes, but the fiduciary may pay those expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction only to the extent that the payment of those expenses from income will not cause the reduction or loss of the deduction; and
     (iii) The fiduciary shall pay from principal all other disbursements made or incurred in connection with the settlement of a decedent's estate or the winding up of a terminating income interest, including debts, funeral expenses, disposition of remains, and death taxes and related penalties that are apportioned to the estate or terminating income interest by the will, the terms of the trust, or applicable law.
     (3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount outright the interest or any other amount provided by the will, the terms of a trust, or applicable law from net income determined under subsection (2) of this section or from principal to the extent that net income is insufficient. Otherwise, no outright gift of a pecuniary amount whether under a will, or under a trust after an income interest ends shall receive interest or any other income.
     (4) A fiduciary shall distribute the net income remaining after distributions required by subsection (3) of this section in the manner described in RCW 11.104A.060 to all other beneficiaries, including a beneficiary who receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to withdraw assets from the trust or other presently exercisable general power of appointment over the trust.
     (5) A fiduciary may not reduce principal or income receipts from property described in subsection (1) of this section because of a payment described in RCW 11.104A.250 or 11.104A.260 to the extent that the will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or to the extent that the fiduciary recovers or expects to recover the payment from a third party. The net income and principal receipts from the property are determined by including all of the amounts the fiduciary receives or pays with respect to the property, whether those amounts accrued or became due before, on, or after the date of a decedent's death or an income interest's terminating event, and by making a reasonable provision for amounts that the fiduciary believes the estate or terminating income interest may become obligated to pay after the property is distributed.

Sec. 3   RCW 11.108.010 and 1997 c 252 s 81 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) The term "pecuniary bequest" means a gift in a governing instrument which either is expressly stated as a fixed dollar amount or is a gift of a dollar amount determinable by the governing instrument, and a gift expressed in terms of a "sum" or an "amount," unless the context dictates otherwise, is a gift of a dollar amount.
     (2) As the context might require, the term "marital deduction" means either the federal or state estate tax deduction or the federal gift tax deduction allowed for transfers to spouses under the Internal Revenue Code or applicable state law.
     (3) The term "maximum marital deduction" means the maximum amount qualifying for the marital deduction.
     (4) The term "marital deduction gift" means a gift intended to qualify for the marital deduction as indicated by a preponderance of the evidence including the governing instrument and extrinsic evidence whether or not the governing instrument is found to be ambiguous.
     (5) The term "governing instrument" includes, but is not limited to: Will and codicils; revocable trusts and amendments or addenda to revocable trusts; irrevocable trusts; beneficiary designations under life insurance policies, annuities, employee benefit plans, and individual retirement accounts; payable-on-death, trust, or joint with right of survivorship bank or brokerage accounts; transfer on death designations or transfer on death or pay on death securities; and documents exercising powers of appointment.
     (6) The term "fiduciary" means trustee or personal representative. Reference to a fiduciary in the singular includes the plural where the context requires.
     (7) The term "gift" refers to all gifts, legacies, devises, and bequests made in a governing instrument, whether outright or in trust, and whether made during the life of the transferor or as a result of the transferor's death.
     (8) The term "transferor" means the testator, donor, grantor, or other person making a gift.
     (9) The term "spouse" includes the transferor's surviving spouse in the case of a deceased transferor.

NEW SECTION.  Sec. 4   A new section is added to chapter 11.108 RCW to read as follows:
     (1) The legislature finds that the citizens and residents of the state, and nonresidents of the state having property located in Washington, desire to take full advantage of the exemptions, exclusions, deductions, and credits allowable under the federal estate, gift, income, and generation-skipping transfer taxes, and the Washington counterparts to those taxes, if any, unless the facts and circumstances indicate otherwise, or the transferor has expressed a contrary intent in the governing instrument.
     (2) In interpreting, construing, or administering a governing instrument, absent a clear expression of intent by the transferor to the contrary, the following presumptions apply and may only be rebutted by clear, cogent, and convincing evidence to the contrary, but these presumptions of intent do not require the making of any particular voluntary tax election:
     (a) The transferor intended to take advantage of the maximum benefit of tax deductions, exemptions, exclusions, or credits;
     (b) The transferor intended any gift to a spouse made outright and free of trust is to qualify for the gift or estate tax marital deduction and to be a marital deduction gift; and
     (c) If the governing instrument refers to a trust as a marital trust, QTIP trust, or spousal trust, or refers to qualified terminal terminable interest property, QTIP, or QTIP property, sections 2044, 2056, and 2523 of the Internal Revenue Code or similar provisions of applicable state law, the transferor intended the property passing to such a trust and the trust to qualify for the applicable gift or estate tax martial deduction, and for the gift to qualify for a marital deduction gift.
     (3) References in this chapter to provisions of the Internal Revenue Code include references to similar provisions, if any, of applicable state law.

Sec. 5   RCW 11.108.025 and 1997 c 252 s 83 are each amended to read as follows:
     Unless a governing instrument directs to the contrary:
     (1) The fiduciary shall have the power to make elections, in whole or in part, to qualify property for the marital deduction as qualified terminable interest property under section 2056(b)(7) or 2523(f) of the Internal Revenue Code or, if the surviving spouse is not a citizen of the United States, under section 2056A of the Internal Revenue Code. Further, the fiduciary shall have the power to make generation-skipping transfer tax allocations under section 2632 of the Internal Revenue Code.
     (2) The fiduciary making an election under section 2056(b)(7), 2523(f), or 2056A of the Internal Revenue Code or making an allocation under section 2632 of the Internal Revenue Code may benefit personally from the election or allocation, with no duty to reimburse any other person interested in the election or allocation. The fiduciary shall have no duty to make any equitable adjustment and shall have no duty to treat interested persons impartially in respect of the election or allocation.
     (3) The fiduciary of a trust, if an election is made under section 2056(b)(7), 2523(f), or 2056A of the Internal Revenue Code, if an allocation is made under section 2632 of the Internal Revenue Code, or if division of a trust is of benefit to the persons interested in the trust, may divide the trust into two or more separate trusts, of equal or unequal value, if:
     (a) The terms of the separate trusts which result are substantially identical to the terms of the trust before division;
     (b) In the case of a trust otherwise qualifying for the marital deduction under the Internal Revenue Code, the division shall not prevent a separate trust for which the election is made from qualifying for the marital deduction; and
     (c) The allocation of assets shall be based upon the fair market value of the assets at the time of the division.
     (4) For state and federal estate tax purposes, a fiduciary may make inconsistent elections under section 2056(b)(7) or 2056A of the Internal Revenue Code and under similar provisions of applicable state law.

Sec. 6   RCW 11.108.060 and 1999 c 44 s 1 are each amended to read as follows:
     For an estate that exceeds the amount exempt from state or federal tax by virtue of the credit under section 2010 of the Internal Revenue Code, if taking into account applicable adjusted taxable gifts as defined in section 2001(b) of the Internal Revenue Code, any marital deduction gift that is conditioned upon the transferor's spouse surviving the transferor for a period of more than six months, is governed by the following:
     (1) A survivorship requirement expressed in the governing instrument in excess of six months or which may exceed six months, other than survival by a spouse of a common disaster resulting in the death of the transferor, does not apply to property passing under the marital deduction gift, and for the gift, the survivorship requirement ((is limited to a six-month period beginning with the transferor's death)) may not exceed the period ending six months following the transferor's date of death, as established under section 2056(b)(3) of the Internal Revenue Code.
     (2) If the property that is the subject of the marital deduction gift is passing or is to be held in trust, as opposed to passing outright, it must be held in a trust meeting the requirements of section 2056(b)(7) of the Internal Revenue Code the corpus of which must: (a) Pass as though the spouse failed to survive the transferor if the spouse, in fact, fails to survive the term specified in the governing instrument; and (b) pass to the spouse under the terms of the governing instrument if the spouse, in fact, survives the term specified in the governing instrument.

Sec. 7   RCW 11.108.900 and 1999 c 42 s 631 are each amended to read as follows:
     (1) This chapter applies to all estates, trusts, and governing instruments in existence on or any time after March 7, 1984, and to all proceedings with respect thereto after that date, whether the proceedings commenced before or after that date, and including distributions made after that date. This chapter shall not apply to any governing instrument the terms of which expressly or by necessary implication make this chapter inapplicable. The judicial and nonjudicial dispute resolution procedures of chapter 11.96A RCW apply to this chapter.
     (2) Sections 3 through 6, chapter -- (this act), Laws of 2006 are remedial in nature and shall be liberally applied in order to achieve the purposes of this act.

Sec. 8   RCW 11.95.070 and 1985 c 30 s 37 are each amended to read as follows:
     (1) This chapter does not apply to any power as trustee described in and subject to RCW 11.98.019.
     (2) This chapter does not apply to the powers of a personal representative of the estate of a decedent when acting in the capacity of personal representative.
     (3) Sections 33 through 36, 38, and 39, chapter 149, Laws of 1984 and the 1984 recodification of RCW 64.24.050 as RCW 11.95.050 apply as of January 1, 1985, to all existing or subsequently created powers of appointment, but not to any power of appointment that expressly or by necessary implication ((make[s])) makes those 1984 changes inapplicable.

Sec. 9   RCW 11.24.010 and 1994 c 221 s 21 are each amended to read as follows:
     If any person interested in any will shall appear within four months immediately following the probate or rejection thereof, and by petition to the court having jurisdiction contest the validity of ((said)) that will, or appear to have the will proven which has been rejected, he or she shall file a petition containing his or her objections and exceptions to ((said)) the will, or to the rejection thereof. Issues respecting the competency of the deceased to make a last will and testament, or respecting the execution by a deceased of the last will and testament under restraint or undue influence or fraudulent representations, or for any other cause affecting the validity of the will or a part of it, shall be tried and determined by the court.
     For the purpose of tolling the four-month limitations period, a will contest commences when a petition is filed with the court. The petitioner shall personally serve the personal representative within ninety days of the date of filing the petition. If following filing, service is not so made, the action has not commenced for purposes of tolling the statute of limitations.
     If no person shall ((appear)) file and serve a petition within the time under this section, the probate or rejection of such will shall be binding and final.

Sec. 10   RCW 11.24.020 and 1965 c 145 s 11.24.020 are each amended to read as follows:
     Upon the filing of the petition referred to in RCW 11.24.010, ((a citation shall be issued)) notice shall be given as provided in RCW 11.96A.100 to the executors who have taken upon themselves the execution of the will, or to the administrators with the will annexed, ((and)) to all legatees named in the will ((residing in the state,)) or to their guardians if any of them are minors, or their personal representatives if any of them are dead, ((requiring them to appear before the court, on a day therein specified, to show cause why the petition should not be granted)) and to all persons interested in the matter, as defined in RCW 11.96A.030(5).

Sec. 11   RCW 11.96A.030 and 2002 c 66 s 2 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Matter" includes any issue, question, or dispute involving:
     (a) The determination of any class of creditors, devisees, legatees, heirs, next of kin, or other persons interested in an estate, trust, nonprobate asset, or with respect to any other asset or property interest passing at death;
     (b) The direction of a personal representative or trustee to do or to abstain from doing any act in a fiduciary capacity;
     (c) The determination of any question arising in the administration of an estate or trust, or with respect to any nonprobate asset, or with respect to any other asset or property interest passing at death, that may include, without limitation, questions relating to: (i) The construction of wills, trusts, community property agreements, and other writings; (ii) a change of personal representative or trustee; (iii) a change of the situs of a trust; (iv) an accounting from a personal representative or trustee; or (v) the determination of fees for a personal representative or trustee;
     (d) The grant to a personal representative or trustee of any necessary or desirable power not otherwise granted in the governing instrument or given by law;
     (e) The amendment, reformation, or conformation of a will or a trust instrument to comply with statutes and regulations of the United States internal revenue service in order to achieve qualification for deductions, elections, and other tax requirements, including the qualification of any gift thereunder for the benefit of a surviving spouse who is not a citizen of the United States for the estate tax marital deduction permitted by federal law, including the addition of mandatory governing instrument requirements for a qualified domestic trust under section 2056A of the internal revenue code, the qualification of any gift thereunder as a qualified conservation easement as permitted by federal law, or the qualification of any gift for the charitable estate tax deduction permitted by federal law, including the addition of mandatory governing instrument requirements for a charitable remainder trust; and
     (f) With respect to any nonprobate asset, or with respect to any other asset or property interest passing at death, including joint tenancy property, property subject to a community property agreement, or assets subject to a pay on death or transfer on death designation:
     (i) The ascertaining of any class of creditors or others for purposes of chapter 11.18 or 11.42 RCW;
     (ii) The ordering of a qualified person, the notice agent, or resident agent, as those terms are defined in chapter 11.42 RCW, or any combination of them, to do or abstain from doing any particular act with respect to a nonprobate asset;
     (iii) The ordering of a custodian of any of the decedent's records relating to a nonprobate asset to do or abstain from doing any particular act with respect to those records;
     (iv) The determination of any question arising in the administration under chapter 11.18 or 11.42 RCW of a nonprobate asset;
     (v) The determination of any questions relating to the abatement, rights of creditors, or other matter relating to the administration, settlement, or final disposition of a nonprobate asset under this title;
     (vi) The resolution of any matter referencing this chapter, including a determination of any questions relating to the ownership or distribution of an individual retirement account on the death of the spouse of the account holder as contemplated by RCW 6.15.020(6);
     (vii) The resolution of any other matter that could affect the nonprobate asset.
     (2) "Notice agent" has the meanings given in RCW 11.42.010.
     (3) "Nonprobate assets" has the meaning given in RCW 11.02.005.
     (4) "Party" or "parties" means each of the following persons who has an interest in the subject of the particular proceeding and whose name and address are known to, or are reasonably ascertainable by, the petitioner:
     (a) The trustor if living;
     (b) The trustee;
     (c) The personal representative;
     (d) An heir;
     (e) A beneficiary, including devisees, legatees, and trust beneficiaries;
     (f) The surviving spouse of a decedent with respect to his or her interest in the decedent's property;
     (g) A guardian ad litem;
     (h) A creditor;
     (i) Any other person who has an interest in the subject of the particular proceeding;
     (j) The attorney general if required under RCW 11.110.120;
     (k) Any duly appointed and acting legal representative of a party such as a guardian, special representative, or attorney in fact;
     (l) Where applicable, the virtual representative of any person described in this subsection the giving of notice to whom would meet notice requirements as provided in RCW 11.96A.120;
     (m) Any notice agent, resident agent, or a qualified person, as those terms are defined in chapter 11.42 RCW; and
     (n) The owner or the personal representative of the estate of the deceased owner of the nonprobate asset that is the subject of the particular proceeding, if the subject of the particular proceeding relates to the beneficiary's liability to a decedent's estate or creditors under RCW 11.18.200.
     (5) "Persons interested in the estate or trust" means the trustor, if living, all persons beneficially interested in the estate or trust, persons holding powers over the trust or estate assets, the attorney general in the case of any charitable trust where the attorney general would be a necessary party to judicial proceedings concerning the trust, and any personal representative or trustee of the estate or trust.
     (6) "Principal place of administration of the trust" means the trustee's usual place of business where the day-to-day records pertaining to the trust are kept, or the trustee's residence if the trustee has no such place of business.
     (7) The "situs" of a trust means the place where the principal place of administration of the trust is located, unless otherwise provided in the instrument creating the trust.
     (8) "Trustee" means any acting and qualified trustee of the trust.
     (9) "Representative" and other similar terms refer to a person who virtually represents another under RCW 11.96A.120.
     (10) "Citation" or "cite" and other similar terms, when required of a person interested in the estate or trust or a party to a petition, means to give notice as required under RCW 11.96A.100. "Citation" or "cite" and other similar terms, when required of the court, means to order, as authorized under RCW 11.96A.020 and 11.96A.060, and as authorized by law.

Sec. 12   RCW 11.96A.100 and 2001 c 14 s 1 are each amended to read as follows:
     Unless rules of court require or this title provides otherwise, or unless a court orders otherwise:
     (1) A judicial proceeding under RCW 11.96A.090 is to be commenced by filing a petition with the court;
     (2) A summons must be served in accordance with this chapter and, where not inconsistent with these rules, the procedural rules of court, however, if the proceeding is commenced as an action incidental to an existing judicial proceeding relating to the same trust or estate or nonprobate asset, notice must be provided by summons only with respect to those parties who were not already parties to the existing judicial proceedings;
     (3) The summons need only contain the following language or substantially similar language:

NEW SECTION.  Sec. 13   A new section is added to chapter 11.96A RCW to read as follows:
     In all matters governed by this title, discovery shall be permitted only in the following matters:
     (1) A judicial proceeding that places one or more specific issues in controversy that has been commenced under RCW 11.96A.100, in which case discovery shall be conducted in accordance with the superior court civil rules and applicable local rules; or
     (2) A matter in which the court orders that discovery be permitted on a showing of good cause, in which case discovery shall be conducted in accordance with the superior court civil rules and applicable local rules unless otherwise limited by the order of the court.

Sec. 14   RCW 11.96A.110 and 1999 c 42 s 304 are each amended to read as follows:
     (1) Subject to RCW 11.96A.160, in all judicial proceedings under this title that require notice, the notice must be ((personally served on or mailed)) served in person, by mail, or by any other commercial delivery service to all parties or the parties' virtual representatives at least twenty days before the hearing on the petition unless a different period is provided by statute or ordered by the court. ((The date of service shall be determined under the rules of civil procedure.)) When original service is made by mail or a commercial delivery service, service is complete upon the third day following the day upon which the petition and summons are deposited in the mail or provided to the commercial delivery service, unless the third day falls on a Saturday, Sunday, or legal holiday, in which event service is complete on the first day other than a Saturday, Sunday, or legal holiday, following the third day.
     (2) No affirmative monetary or injunctive relief, including an award of costs under RCW 11.96A.150, may be awarded against any party in a judicial proceeding absent proof of actual notice of such proceeding having been served on that party in accordance with subsection (1) of this section. The following constitutes proof of actual notice for purposes of this subsection: (a) Proof of mailing or sending, together with a return receipt or acknowledgment of delivery signed by the party; (b) other written acknowledgment by the party of having received actual notice of the proceedings; or (c) proof of personal service on the party in accordance with RCW 4.28.080.
     (3) Upon a showing that a party's address cannot be ascertained with reasonable effort, that a party has failed to sign or acknowledge receipt of a mailing or delivery, or that a party is evading personal service, the court may order service by publication pursuant to RCW 4.28.100 and 4.28.110 or other alternative means of personal service allowed under the superior court civil rules.
     (4) Proof of the service ((or)), mailing, or actual notice required in this section must be made by affidavit or declaration filed at or before the hearing.

Sec. 15   RCW 11.96A.150 and 1999 c 42 s 308 are each amended to read as follows:
     (1) Either the superior court or ((the)) any court on an appeal to that court may, in its discretion, order costs, including reasonable attorneys' fees, to be awarded to any party: (a) From any party to the proceedings; (b) from the assets of the estate or trust involved in the proceedings; or (c) from any nonprobate asset that is the subject of the proceedings. The court may order the costs, including reasonable attorneys' fees, to be paid in such amount and in such manner as the court determines to be equitable, considering any and all factors that it deems relevant and appropriate. The court need not make a finding of benefit to any trust or estate.
     (2) This section applies to all proceedings governed by this title, including but not limited to proceedings involving trusts, decedent's estates and properties, and guardianship matters. This section shall not be construed as being limited by any other specific statutory provision providing for the payment of costs, including RCW 11.68.070 and 11.24.050, unless such statute specifically provides otherwise. This ((statute [section])) section shall apply to matters involving guardians and guardians ad litem and shall not be limited or controlled by the provisions of RCW 11.88.090(((9))).

NEW SECTION.  Sec. 16   A new section is added to chapter 11.95 RCW to read as follows:
     A person shall not be treated as having made a disposition in trust for the use of that individual by reason of a lapse of a power of withdrawal over the income or corpus of a trust created by another person. For this purpose, notification to the trustee of the trust of an intent not to exercise the power of withdrawal shall not be treated as a release of the power of withdrawal, but shall be treated as a lapse of the power.

Sec. 17   RCW 6.32.250 and 1987 c 442 s 1115 are each amended to read as follows:
     This chapter does not authorize the seizure of, or other interference with, (1) any property which is expressly exempt by law from levy and sale by virtue of an execution, attachment, or garnishment; or (2) any money, thing in action or other property held in trust for a judgment debtor where the trust has been created by, or the fund so held in trust has proceeded from, a person other than the judgment debtor; or (3) the earnings of the judgment debtor for personal services to the extent they would be exempt against garnishment of the employer under RCW 6.27.150. For purposes of this section, a person shall not be treated as having made a disposition in trust for the use of that person by reason of a lapse of a power of withdrawal over the income or corpus of a trust created by another person. For this purpose, notification to the trustee of the trust of an intent not to exercise the power of withdrawal shall not be treated as a release of the power of withdrawal, but shall be treated as a lapse of the power.

Sec. 18   RCW 19.36.020 and Code 1881 s 2324 are each amended to read as follows:
     That all deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels or things in action, made in trust for the use of the person making the same, shall be void as against the existing or subsequent creditors of such person. For purposes of this section, a person shall not be treated as having made a disposition in trust for the use of that person by reason of a lapse of a power of withdrawal over the income or corpus of a trust created by another person. For this purpose, notification to the trustee of the trust of an intent not to exercise the power of withdrawal shall not be treated as a release of the power of withdrawal, but shall be treated as a lapse of the power.

Sec. 19   RCW 11.62.005 and 1994 c 21 s 1 are each amended to read as follows:
     As used in this chapter, the following terms shall have the meanings indicated.
     (1) "Personal property" shall include any tangible personal property, any instrument evidencing a debt, obligation, stock, chose in action, license or ownership, any debt or any other intangible property.
     (2)(a) "Successor" and "successors" shall mean (subject to subsection (2)(b) of this section):
     (i) That person or those persons who are entitled to the claimed property pursuant to the terms and provisions of the last will and testament of the decedent or by virtue of the laws of intestate succession contained in this title; and/or
     (ii) The surviving spouse of the decedent to the extent that the surviving spouse is entitled to the property claimed as his or her undivided one-half interest in the community property of said spouse and the decedent; and/or
     (iii) The department of social and health services, to the extent of funds expended or paid, in the case of claims provided under RCW 43.20B.080; and/or
     (iv) This state, in the case of escheat property.
     (b) Any person claiming to be a successor solely by reason of being a creditor of the decedent or of the decedent's estate, except for the state as set forth in (a)(iii) and (iv) of this subsection, shall be excluded from the definition of "successor".
     (3) "Person" shall mean any individual or organization((.
     (4) "Organization" shall include a)), specifically including but not limited to a bank, credit union, brokerage firm or stock transfer agent, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity.

NEW SECTION.  Sec. 20   This act clarifies and declares the existing laws of this state. This act is enforceable as to all persons and all trusts regardless of when the trust was created.

NEW SECTION.  Sec. 21   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.