[WSBAPT] sale of beneficiary's interest in trust

[John J. Sullivan, Esq.]

Joshua:

 

Two thoughts: (1) without embarking on a planned or enforceable series of sales, transfer interests in the trust over time that do not cross the “controlling interest requirement;” or (2) if there are additional assets, e.g., cash, have the grandparents contribute and then do a terminating TEDRA with non-pro rata distributions? Remember the “controlling interest” test was tightened last year. 

Just oof the top, while “attending” the annual estate planning seminar.”

 

John J. Sullivan

 

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of David Faber
Sent: Friday, October 30, 2020 10:05 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] sale of beneficiary's interest in trust

 

Either way, the answer is "yes there is excise tax" because consideration is being paid in exchange for half of the title interest and no exemption applies under WAC 458-61A that I can see.

 

I'm curious: are Client's children purchasing the interest in the cabin or is the Trustee purchasing?




Best,

David J. Faber

Faber Feinson PLLC

210 Polk Street, Suite 1

Port Townsend, WA 98368
(360) 379-4110

 

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On Tue, Oct 27, 2020 at 6:20 PM Josh Grant <jgrant at accima.com <mailto:jgrant at accima.com> > wrote:

I have a client who is a trustee of an inter vivos trust.  The trustors were grandparents of 4 grandchildren (two are clients kids and the other two are nephews).

The only asset is a lake cabin.

Only two of the beneficiaries want to have anything to do with the cabin.  The 4 have come to an agreement that the client’s kids will buy out the others and have agreed on a price.

I am wondering if the grandkids were, pursuant to a TEDRA agreement, to purchase the other grandkids’ beneficiary interest in the trust (as opposed to the land itself after termination of the trust) and the trust continued, whether there would be any excise tax payable?  I assume so but wanted to check.

Would there be any benefit in selling/buying a beneficiary’s interest rather than simply terminating the trust and having a sale of the real property?

 

josh

Joshua F. Grant

P. O. Box 619
Wilbur, WA 99185
509 647 5578

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