[WSBAPT] Estate Planning for Non-Married Couple

[Eric Nelsen]

I'm taking the question as looking specifically at one asset--a house in A's name, with a loan in A's name encumbering it, and A is in a committed intimate relationship with B.

Assuming that is right, I think you are running into a fundamental conceptual difference between CIR and marriage, and the related legal rights. In a CIR, the only time a property interest is lawfully transferred to a non-title-holder is in property settlement litigation, where the court can order a fair and equitable division of property accumulated during the CIR between the two parties. Up until that point - and so far as current case law really reaches - B has no property interest in A's house that existing law protects by facilitating the addition of B to record title.

Given that, a "retitle" of this property to add B is in fact a property transfer, so it triggers due on sale and incurs excise tax and so forth. There are no legal protections or exemptions for that transfer, because in the eyes of the law A and B are "strangers."

I would go back and consider the purpose of the intention to retitle. If A simply wants to give an interest to B, look at the tax implications of doing it as a gift. If B did in fact contribute money at the time of purchase and/or their other financial considerations that B has provided to A, I would calculate the value and see if it might be easiest to simply pay the 1.78% transfer tax. And, if B is going to be on title, they probably will need a Tenant in Common Agreement or a Cohabitation Agreement of some kind, to make clear what their property interests are and how they will be handled going forward. On the other hand, there might be ways to accomplish the original intention, without changing title, perhaps with a Will or other estate planning document, or a Trust, or even mere contract.

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

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Nicholas Pleasants
Sent: Saturday, March 17, 2018 2:01 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Estate Planning for Non-Married Couple

I started looking into drafting an estate plan for an unmarried couple, and I have a problem with how to retitle current assets. Let's say the real property has a loan on it. You can't quit claim the interest in the property without triggering due on sale (the exclusion for transfers to family members doesn't apply because they are not technically family), and even if the lender allowed it, DOR would want to collect 1.78% tax on the transfer. They can't do a community property agreement since they aren't married. Does anyone have experience dealing with this situation? I'd appreciate any thoughts.

Best,
Nick

Nicholas Pleasants
James Pleasants, P.C.
2300 130th Ave NE, Suite A-101
Bellevue, WA 98005-1755
(425) 615-7070 tel.
(425) 497-0799 fax
nick at pleasantslaw.com<mailto:nick at pleasantslaw.com>
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