[WSBAPT] RE Excise Tax question

Wed May 18 17:14:31 PDT 2016

Martin,
The relief from Debt by the trust in exchange for the one half interest
conveyed to the lender is ‘consideration’ under the WACs, regardless of
whether the debt is secured or not. The transfer is not a true gift, bc
there is relief from debt for the transferor.  YOU might sneak it through bc
there is no record of a loan. But, If the DOR audits this transaction,
without there being excise tax paid, I would wager interest and penalties
will be charged to Transferor Trust.

Michael A. Winslow
1204 Cleveland Ave.
Mount Vernon, WA 98273
Ph. 360-336-3321
Em. 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 Martin Silver
Sent: Wednesday, May 18, 2016 4:50 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] RE Excise Tax question

If the client is the beneficiary sounds like you just do the deed as an
inheritance/gift, no debt on the property and the affidavit just cites the
inheritance/gift exemption and I don’t know why you would reference debt
relief in the affidavit. 

If client is not the beneficiary and is receiving cod then isn't client
transferring consideration by cancelling the debt, even though there is no
technical debt relief by the transfer because of absence of encumbrance
against the property?

What I don’t see from the facts is why is the trust giving the client a note
each year?  doesn’t the client owe the trust some rent for using its 1/2?
Don’t you have to figure out what the balance between fair rent due the
trust and debt paid by the client for the trust’s 1/2 is to know whether and
how much cod there is, if any? 

If client is the bene, who cares, but if there are other bene’s then the
value of fmv 1/2 compared to 1/2 of expenses paid has to be figured out and
that answers the consideration question for the affidavit.  Doesn’t it?
Make sense or am I missing something?     

From: Patrick J. Galloway <mailto:patrick at alsnorthwest.com>  
Sent: Wednesday, May 18, 2016 2:58 PM
To: WSBA Probate  <mailto:wsbapt at lists.wsbarppt.com> & Trust Listserv 
Subject: Re: [WSBAPT] RE Excise Tax question

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. Galloway
Advance Legal Services, PLLC
8113 W. Quinault Ave. Suite 101
Kennewick, 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.

*_Important Disclosures Regarding Email Communications_*
Advisory services through Retirement Wealth Advisors, Inc., a SEC Registered
Investment Advisor. This Email is being sent by or on behalf of a Registered
Investment Advisor. It is intended exclusively for the individual or entity
to which it is addressed. This communication may contain information that is
proprietary, privileged, or confidential, or otherwise legally exempt from
disclosure. If you are not the named addressee, you are not authorized to
read, print, retain, copy or disseminate the Email or any part of it. If you
have received this Email in error, please notify the sender immediately by
Email or fax, and destroy all copies of this communication. Please be
advised that you may conduct securities transactions only by speaking
directly with your Investment Advisor Representative either by phone or in
person. Requests for securities transactions via email will not be executed
by Retirement Wealth Advisors, Inc. To help protect your privacy, we
strongly suggest you avoid sending sensitive information, such as account
numbers and social security numbers via Email.  Please be further advised
that, pursuant to the Bank Secrecy Act, the USA PATRIOT ACT, and similar
laws, any communication in this email is subject to regulatory, supervisory,
and law enforcement review.

  _____  

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-102
see the definition of consideration  and sale.

Michael A. Winslow
1204 Cleveland Ave.
Mount Vernon, WA 98273
Ph. 360-336-3321
Em. 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 Toner
Attorney at Law
1600-B SW Dash Point Road, #163
Federal Way, WA 98023
phone 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.

_______________________________________________ WSBAPT mailing list
WSBAPT at lists.wsbarppt.com http://mailman.fsr.com/mailman/listinfo/wsbapt
  _____  

_______________________________________________
WSBAPT mailing list
WSBAPT at lists.wsbarppt.com
http://mailman.fsr.com/mailman/listinfo/wsbapt
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20160518/7bbc0ea3/attachment.html>