[WSBAPT] RE Excise Tax question

Wed May 18 14:58:43 PDT 2016

This one has me curious. I am not sure I understand the fact pattern or the estate planning strategy that was being implemented. Is there a tax benefit that was gained from the promissory notes? Is this an attempt to avoid claims of other beneficiaries of the trust? Is the client not a beneficiary of the trust?
Can the trust simply make the distribution and dissolve? I am not sure why you would need to pay REET on a gift/inheritance and what the benefit of making the transfer for consideration is. Just looking for some education from the group on this one.
Thanks,

Patrick J. GallowayAdvance Legal Services, PLLC8113 W. Quinault Ave. Suite 101Kennewick, WA 99336 (509) 851-7884  www.alsnorthwest.com This E-Mail message and any documentation accompanying this transmission may contain privileged and/or confidential  information and is intended solely for the addressee(s) named above.  If you are not the intended addressee/recipient, you are hereby notified that any use of, disclosure, copying, distribution, or reliance on the contents of this E-Mail information is strictly prohibited and may result in legal action against you.  Please reply to the sender advising of the error in transmission and immediately delete/destroy the message and any accompanying documents.  Thank you.
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From: mike at winslegal.com
To: wsbapt at lists.wsbarppt.com
Date: Wed, 18 May 2016 14:06:27 -0700
Subject: Re: [WSBAPT] RE Excise Tax question

Under the provisions of the Real Estate Excise Tax rules the transfer of the interest is for value, equal to the relief from debt, so would be subject to tax as a “sale”. If there is remaining debt, that debt is not part of the consideration paid for the transfer.http://app.leg.wa.gov/wac/default.aspx?cite=458-61A-102see the definition of consideration  and sale. Michael A. Winslow1204 Cleveland Ave.Mount Vernon, WA 98273Ph. 360-336-3321Em. Mike at winslegal.com This message is from an attorney, so it’s confidential. If you are not the intended recipient, it’s too late to stop reading this message, but you may not use it for any improper purpose. Huge Disclaimer available upon request. From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Eden Rubenstein Toner
Sent: Wednesday, May 18, 2016 1:28 PM
To: WSBA PT list
Subject: [WSBAPT] RE Excise Tax question I’m trying to figure out the RE excise tax computation in this situation:  Client owns ½ interest in property.  A testamentary trust of which client is Trustee owns the other ½.  There are no other assets in the trust.  Client occupies the property and has paid mortgage, taxes, insurance and all expenses for many years, keeping track of all payments and issuing a promissory note from the trust to client each year.  The trust is now indebted to client for more than the value of the trust’s interest in the property.  Client wants to deed the property from the trust to client in full satisfaction of the debt, despite the fact that the debt is greater than the value of the property.Questions—is tax due on the full amount of the debt being satisfied, or just the actual amount satisfied?  Does it matter that the debt is not secured by the property?  And if client continues to pay the full amount of the mortgage, is half the outstanding mortgage value part of the excise tax computation?Thank you in advance for any guidance.Eden Eden Rubenstein TonerAttorney at Law1600-B SW Dash Point Road, #163Federal Way, WA 98023phone 206-953-4485     IMPORTANT: This e-mail message (and any attachments accompanying it) is intended to be confidential, only for the use of the intended recipient(s). If you are not the intended recipient, or if this message has been addressed to you in error, please notify me by reply e-mail, and then destroy all copies of the message and its attachments, if any. Your cooperation is greatly appreciated.  My email is not encrypted;  if you have sensitive information to transmit, please contact me before sending.  
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