[WSBAPT] Disclaimers & Promissory Note to fund Bypass Trust

Wed Apr 29 15:38:03 PDT 2015

I realize I could have surviving spouse disclaim interest in residence and then do PR Deed putting ½ of the residence in Bypass Trust.  PR could then sell that interest to surviving spouse, get back a promissory note and also prepare and record a DOT to secure the interest.  But, I’m worried about excise taxes.  Is there a clear exemption/qualified transaction in the WAC?
Is that any risk, and if so what would it be to instead:

1)      Have surviving spouse sign a qualified disclaimer (as to decedent’s ½ community property interest in house) – file disclaimer in probate file

2)      Then sell that interest to surviving spouse and get the Promissory note and Deed of Trust as discussed above owned in the bypass trust

3)      Have PR sign a deed placing the decedent’s interest (i.e. the full probate interest) to surviving spouse.

Wouldn’t that dot the “I”s and cross the “t”s allowing funding of the bypass trust while avoiding any real estate excise taxes?
And, the surviving spouse would still have the full Section 125 deduction  (avoidance of capital gain) if home later sold for less than $250K above the FMV at death of the first spouse?
Is there any risk associated with this plan/order of events?

Stephen M. Waltar, PS
Estate Planning Law
1750 - 112th Avenue NE, Suite C245
Bellevue, WA  98004
(425) 455-6788
www.waltar.com<http://www.waltar.com/>

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Steve Waltar
Sent: Wednesday, April 29, 2015 12:25 PM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Promissory Note to fund Bypass Trust

First, who can give me an overview of using a promissory note instead of placing residence into a bypass trust?
Second, can you put a promissory note into a bypass trust – at all when it is a disclaimer trust?

Stephen M. Waltar, PS
Estate Planning Law
1750 - 112th Avenue NE, Suite C245
Bellevue, WA  98004
(425) 455-6788
www.waltar.com<http://www.waltar.com/>

[cid:image002.jpg at 01CA47FC.9ED8CEE0]<http://www.waltar.com/>

If we should be helping someone you care about,
please don't keep us a secret!

[facebook]<https://www.facebook.com/pages/Stephen-M-Waltar-PS/663832273655743>  [twitter] <https://twitter.com/WaltarLaw>   [linkedin] <http://www.linkedin.com/company/3173783?trk=tyah>   [g-plus-icon-32x32] <https://plus.google.com/u/0/114715232767415279995>   [youtube] <http://www.youtube.com/StephenMWaltarPS>
Circular 230 Warning:  This communication is not intended to constitute tax advice and may not be used by any person or entity for the purpose of avoiding penalties that may be imposed by the Internal Revenue Service.
Confidentiality Notice: The information contained herein and any attachments are a private communication sent by the Law Firm of Stephen M. Waltar, PS and may contain confidential and/or legally privileged information meant solely for the intended recipient.  If you are not the intended recipient, you are hereby notified that any use, dissemination, distribution, forwarding or any form of copying of this communication is strictly prohibited. Please notify the sender immediately by replying to this message, then delete the e-mail and any attachments from your system.

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