[WSBAPT] Washington Estate Tax/Gifting

[Philip N. Jones]



How does this reduce B’s estate?  The transfer of funds from B to A is not a gift.  It was made in consideration of the original transfer (the “loan”) from A to B.  Does B really have a debt to A that will reduce B’s estate?  Is that debt really going to be paid from B’s estate to A after B dies?  Apparently not, particularly after B made the “gift.”  This seems like a sham.  The transaction has no economic consequence other than tax reduction.  Neither A nor B actually changes their economic situation.   It fails the economic substance test.  That would seem to invoke the sham transaction doctrine.
Phil Jones

Philip N. Jones
Duffy Kekel LLP
Portland, OR
pjones at duffykekel.com
(503) 853-1482 cell

On Jul 2, 2021, at 5:46 PM, Roger Hawkes <Roger at law-hawks.com> wrote:


Kudos for thinking of it; if the letter of the law means anything then it works😊

Roger Hawkes, WSBA # 5173
Shoreline Office: 19944 Ballinger Way NE
                                Shoreline, WA 98155
Sultan Office:        423 Main
                                 Sultan, WA 98294

Phone: 206 367 5000; fax: 206 367 4005
Email: roger at law-hawks.com<mailto:roger at law-hawks.com>
Web site: www.hawkeslawfirm.com<http://www.hawkeslawfirm.com/>
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Jacob Menashe
Sent: Friday, July 2, 2021 5:36 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Washington Estate Tax/Gifting

I’m not sure who is going to read this at this point going into a holiday weekend, but I am thinking about another situation and I figured I’d throw out another question. I am thinking about someone who is land rich and cash poor and in poor health. This person would like to gift cash, and not their appreciated real estate. This person could be at the end of their life and wouldn’t be able to secure conventional financing. What I’m thinking about is A lending money to B, secured against B’s real estate, and then B gifting the cash to A. This would reduce B’s estate. It seems like this could be okay, since A is really lending money to B and B is really taking on a debt. And thus B’s taxable estate can be reduced. But it also seems like something that could be questioned, because of the nature of the transaction. Does anyone have any thoughts on this?

Sincerely,

Jacob

Jacob H. Menashe
Hickman Menashe, PS
4211 Alderwood Mall Blvd., Suite 204
Lynnwood, WA 98036
(425) 744-5658 phone
(425) 744-6078 fax
Satellite Office in Bellevue
www.hickmanmenashe.com

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