Another tax season behind him, Lars is having one of his periodic late-afternoon check-ins with lawyer friend Duncan, mostly on wealthy Uncle Nils's affairs. Duncan like Lars has a nice but not fancy office, befitting a sensible personality and a modest prominence in a medium-sized city. Duncan had recently helped to establish the $500,000 trust given by Uncle Nils for relatives. Lars is trustee.
Duncan tells Lars there is new Washington law defining a trustee's duty to inform the beneficiaries. Lars is sensing from Duncan's earnest tone and widened eyes that he should be more than a little bit concerned about the requirements.
There are two main parts of the law. First, a newly defined duty to inform beneficiaries of the existence of the trust at the outset. This initial notice must tell of the existence of the trust, of who gave it (here Nils), of who is Trustee (here Lars) and how he may be contacted, and of the beneficiary's right to request information about the trust.
There are eight beneficiaries of the $500,000 trust: Lars, his wife Kyra, his three children and one grandchild, and Lars's sister and her son. The main idea of this "generation-skipping" trust is to pay income to Lars and Kyra from one share, and to Lars's sister from another, for their lifetimes and then to pass on to the next generation without being subject to estate tax in the first generation of beneficiaries. Distributions of principal may be made to either generation as needed, but this isn't expected. Lars has to give this initial notice now. So what's the problem?