[WSBAPT] Will provisions - purchase of family home

[John J. Sullivan]

Rich:

This is not an uncommon provision, a means of providing a limited bequest (devise) in a specific asset. It’s perfectly acceptable. Obviously the value of the gift will increase as the real estate appreciates, so really it sets a ceiling on how much the residuary beneficiaries benefit from that asset. 

Tax? I think you would bifurcate for REET, claiming a partial inheritance exemption for the excess value over price. I don’t think the county/DOR should be able to impose a higher assessed value as the price. For federal income tax purposes the property still gets the same basis adjustment to FMV. Interesting question I’ve never researched - what is the effect of the partial purchase on basis in the hands of the buyer assuming basis was adjusted higher than the purchase price. 

Regards,
John J. Sullivan

Sent from my iPad

> On Jul 23, 2018, at 7:09 AM, Philip N. Jones <pjones at duffykekel.com> wrote:
> 
> I agree with Krista.  If the house is worth $500,000, and a purchase price is set at $400,000, then the testator has made a bequest of $100,000.  The bequest could be very large if years and years go by before the testator dies.  As Krista points out, FMV might be better.
> Phil Jones
> Portland, OR
>  
> From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Krista MacLaren
> Sent: Friday, July 20, 2018 4:56 PM
> To: wsba probate & trust <wsbapt at lists.wsbarppt.com>
> Subject: Re: [WSBAPT] Will provisions - purchase of family home
>  
> If the price were under market value then maybe there would be tax implications?  Maybe the will should specify the person would have the right to purchase the house at FMV.
>  
>  
> Krista J. MacLaren
> Attorney at Law
> Northgate Executive Center II
> 9725 3rd Ave NE, Suite 600
> Seattle WA 98115
> (206) 523-6116
> kjm.inc at icloud.com
> 
> Please note, as with most email providers, Mac does not encrypt email messages. Accordingly, the confidentiality of messages sent to this address cannot be assured. This e-mail is intended for viewing only by the individual or entity to whom its content is addressed, and it may contain confidential or privileged information. If you received this email in error, please honor the privacy of the intended recipient: reply to the sender regarding the error and delete the message.
> 
> 
> 
> On Jul 20, 2018, at 4:38 PM, J Richard McEntee, Jr. <jrmcentee at gmail.com> wrote:
>  
> Good evening —
>  
> I just received a question and am not certain of the answer. Client would like a provision in the will that allows a beneficiary to purchase the “family home” at a set price stated in the will. It seems as though this should not be an issue. However, I have not see it before. What concerns might there be related to such a provision?
>  
> Thank you
> Rich
>  
> 
> RICH McENTEE
> McENTEE LAW OFFICE
> 3800 Bridgeport Way W, Ste A411
> University Place, WA 98466
> 253.227.9894(m)
> jrmcentee at gmail.com       
>  
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