[WSBAPT] Deed Question

Wed May 25 14:32:59 PDT 2016

In many counties an excise tax affidavit must be processed with the
Treasurer before taking the CPA to the Auditor for recording. Soon this will
be the law of the land since the DOR has issued regulations which take
effect shortly.

Following from DOR:  

Recently passed legislation, SHB 2539, authorizes a new method to claim and
document a valid inheritance exemption from the Real Estate Excise Tax
(REET).  

The exemption is updated (effective of June 9, 2016) to allow it to be
claimed by presenting a "Lack of Probate" affidavit along with a certified
copy of the death certificate to the county.  This is in addition to the
other traditional methods (noting that the affidavit of surviving spouse
option will be absorbed by the lack of probate affidavit option).  

The legislation also makes minor modifications to documentation requirements
and adds a requirement to record inheritance exemption documentation with
the county auditor.

The documentation required is listed in Sec. 2. (1) (a) through (i) of the
legislation.  The associated rule, WAC 458-61a-202, will not be updated
prior to the effective date of this legislation.  Therefore, please use RCW
82.45.197(1) (a) through (i) as the legal reference on the real estate
excise tax affidavit for claiming an inheritance exemption (on, or after
June 9th) until such time as the rule is updated.

The Department's website will be updated (forms, under "R" for real estate)
to include a version of the "Real Estate Excise Tax Lack of Probate
Affidavit" to assist taxpayers pursuing this method.  

Certified copies of death certificates maybe purchased from the Washington
State Department of Health at:  

<http://www.doh.wa.gov/LicensesPermitsandCertificates/BirthDeathMarriageandD
ivorce/OrderCertificates>
http://www.doh.wa.gov/LicensesPermitsandCertificates/BirthDeathMarriageandDi
vorce/OrderCertificates  

Please feel free to contact our general contact number (360-534-1503) if you
have any questions or suggestions when trying to process these.

Please share this message with others as you deem appropriate, it will be
appreciated!

Thanks!

Mel Kirpes

Miscellaneous Tax Program Coordinator  |  Special Programs Division
Washington State Department of Revenue

Capital Plaza Building  |  PO Box 47477  |  Olympia, WA 98504-7477
360/534-1434  |  F 360/534-1499  |  dor.wa.gov  |   <mailto:melk at dor.wa.gov>
melk at dor.wa.gov

Working together to fund Washington's future

Following from Dwight Bickel, Senior Title Counsel:

Property Transferred by Operation of Law is Exempt from Real Estate Sales
Tax Again

The Real Estate Excise Tax [REET] only applies to sales or real property.
Transfers by operation of law have always been defined not to be sale,
therefore exempt from REET. 

Transfers of ownership that are accomplished pursuant to court orders, such
as partition, divorce, condemnation and quiet title, are not taxable.
Changes in ownership to real property that occur by changes in the owner
entity that are not due to sales are not taxable. Transfers that occur
pursuant to devise made by a Will are not taxable. Transfers that occur due
to the death of an owner pursuant to the legal effect of intestate
succession, community property, joint tenancy, life estates and transfer on
death deeds are not taxable. These changes in ownership are not required to
pay REET, even if there is no probate or court proceeding.

However, since a statutory change in 2008, certain Treasurers have required
excise tax if the heirs did not complete a probate. The purpose of RCW
82.45.197 since 2008 has been to allow recording of documents to show exempt
transfers by operation of law. It specified the documentation to be provided
to the excise tax desk to prove that the transfer was exempt.

About four years ago a couple County Treasurers began interpreting RCW
82.45.197 as authority to require heirs who receive title by inheritance to
pay REET if they did not have proper documentation. The position taken was
that a probate was required to avoid REET. This affected only a few people
because most intestate and non-probate heirs were not recording documents
and not filing excise tax affidavits.

Since February 28, 2014, a change was made to WAC 458-61A-303 [the
regulation that explains when a real estate excise affidavit is required].
Now all transfers by operation of law are required to file an excise tax
affidavit. Previously, the Regulations required an excise tax affidavit and
specified the documentation that was required to claim exemption from REET
for transfers by operation of law only when conveyance documents were
recorded.

WAC 458-61A-303 (2) Affidavit required. In general, an affidavit must be
filed
when ownership or title to real property transfers as evidenced by
conveyance, deed, grant, assignment, quitclaim, or any other document
effectuating the transfer including, but not limited to, the following:
(b) ((Conveyance)) Transfer resulting from a court order;
(g) ((Conveyance)) Transfer to an heir in the settlement of an
estate;  

The amendments passed this year expand the documentation that may satisfy
the excise tax person and should promote having the real property records
show evidence of such off-record changes in ownership. A new provision
allows heirs to record a short "Lack of Probate Affidavit" to evidence the
change of ownership. That Affidavit also is allowed where a Will exists,
though has not been probated.

When title companies train examiners and title officers, it will be most
important to emphasize that these changes and that recorded affidavit are
completely unrelated to underwriting whether to insure against claims of
heirs without a probate. The Department of Revenue has drafted its own
suggested affidavit form. None of those forms will include the information
that title companies have traditionally requested for underwriting.

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 John McCrady
Sent: Wednesday, May 25, 2016 12:22 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Deed Question

Typically, all that is needed is to record the Community Property Agreement
along with a redacted death certificate.  Many practitioners also prepare
and record a community property survivorship affidavit .

John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98466
253-476-5721

From: wsbapt-bounces at lists.wsbarppt.com
[mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jennifer Nugent
Sent: Wednesday, May 25, 2016 11:43 AM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Deed Question

Good morning, 

I was preparing a TOD Deed for Wife and discovered that the property was
still in Husband and Wife's name.  Husband passed away several years ago.
The two has a Community Property (CP) agreement but nothing was done with it
at the time of Husband's death and his estate was never probated. 

Procedurally, do I need to prepare a CP deed, get it recorded and then after
that complete a TOD deed and have it recorded?  

Also, does anyone have an example of a CP Deed they would be willing to
share?

Thanks, 

Jennifer Nugent

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