[WSBAPT] Sibling buy out

[Eric Nelsen]

Under that structure, I don't think you would mention the intent to forgive payments, since there is no reason for the holders to waive their rights in advance.

But I'd consider a different structure:  Transfer the property to all three as tenants in common, then do a TIC agreement between them that says taking child has sole right of occupancy conditioned on paying all taxes and maintenance/repair, and keeping the property fully insured, not committing waste, etc.; have a provision prohibiting partition; have another provision confirming that the parties own it in equal shares and will receive one-third of net proceeds directly upon sale without any offset for expenses paid by taking child. There would be a few other bells and whistles, but that makes sure the other two share automatically in any increase or decrease in market value of the property and will get paid in full at the time it sells. I think it is safer to have the tenant in common interest than a mere monetary interest secured by a deed of trust.

My two cents, based on minimal information...

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of jeffrey winter
Sent: Wednesday, November 16, 2016 4:31 PM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Sibling buy out


Listmates,



I have an estate where mom died leaving 3 beneficiaries -- two children, and the surviving spouse of a third child who survived the parent, but died shortly afterward.  Surviving spouse takes the deceased child's share under a Community Property Agreement (Will had specified to the three children "share and share alike", with no provision for descendants of a deceased child taking...).



One child is residing in mom's home, and wishes to stay there (the "taking child") -- the other child and the surviving spouse of the decease child, would like the taking child to be able to live at mom's house, but wish to be protected in the event it is sold.  The plan presently is for mom's estate to convey the house to the taking child, subject to a note and second deed of trust in favor of the sibling and surviving spouse.  The sibling and surviving spouse intend to forgive the payments due under the note, but -- in the event the house is sold-- would have their interests protected.



There will be a TEDRA outlining this arrangement -- the question is:  do we refer to the intent to forgive payments under the note in the TEDRA?  I would think that to be fair to the taking child, we would...but I'm concerned about what effect this might have with respect to excise and/or income taxes.



Jeff Winter



Law Office of Jeffrey D. Winter, P.S.

604 North Main Street

Ellensburg, WA 98926

(509) 925-9600
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