[WSBAPT] Devising real property owned by LLC

[Joshua McKarcher]

To me this is black and white, Timothy, and LLC interests are in no way real property, and thus pass with the residual, zero inkling of legal doubt.

That's my starting point.

Then, if the real property beneficiaries believe they have some case of testator mistake of law or fact; or think they can show testator made the will before contributing his real property interests to the LLC and "intended" those assets to go to the real property beneficiaries (but also somehow didn't think or know to simply amend his will simultaneously) . . . well then, bless their hearts, the real property beneficiaries may have their day (hour? Unless the judge is very patient? . . . ) in court.

I hope that helps give resolve to your PR/TTEE client.

Further Josh Elaboration:

It is one of the principal duties of estate and tax lawyers constantly to tell and insist and remind and inform third parties that LLCs are NOT (unlike we humans with our food choices) the assets they hold.

LLC interests are simple intangible personal property (equity) assets. Confusing that simple fact for what assets are INSIDE the LLC can be the first step in analytical disaster.

This matters even more, somewhat ironically, because for OTHER purposes (utterly irrelevant to this analysis) the assets held in the LLC, or its equity holders, or other characteristics of the particular LLC can affect or alter or determine some totally different analysis related to (for example) income tax, cost basis, capital gains, a "sole member LLC held by a married couple as community property (huh?)," and lots of other fun things that prove we lawyers are robots reprogrammed at "law school," hopefully with at least some personality strong enough to survive the experience.

But on this issue, those interests pass as personal property whether the blasted thing holds real property or real gold nuggets.

Best, Josh

Joshua D. McKarcher
McKarcher Law PLLC
537 6th Street
Clarkston, WA 99403
(509) 758-3345
(509) 758-3314 (fax)
josh at mckarcherlaw.com
www.mckarcherlaw.com<http://www.mckarcherlaw.com>
________________________________
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Timothy Lehr <timothy at stileslaw.com>
Sent: Tuesday, October 29, 2024 8:29 AM
To: wsbapt at lists.wsbarppt.com <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Devising real property owned by LLC

All,

Decedent has a Will which includes a section that devises “any real property that I may own at the time of my death…” to certain beneficiaries. The Will also has a residuary that devises all other assets “whether real or personal…” to certain beneficiaries. The beneficiaries of each section are slightly different.

Decedent owned a fractional share in a family LLC and the LLC owns certain real property. Would decedent’s LLC interest pass via her residuary or pursuant to her provision in the Will devising “any real property” if the main assets in the LLC are real property? My initial thought is because she only owned an interest in the LLC, and the LLC is the owner of the real property, not decedent personally, that the LLC interest passes pursuant to her residuary. But I’m not sure if others have run into this or have thoughts?

Thanks,

Timothy C. Lehr
Attorney & Partner

[cid:image001.jpg at 01DB29DC.0F8C52C0]

p:   360.855.0131
e:   timothy at stileslaw.com<mailto:timothy at stileslaw.com>
w:  www.stileslaw.com<http://www.stileslaw.com/>

NOTICE: The information contained in this email is proprietary and/or confidential and may be privileged. If you are not the intended recipient of this communication, you are hereby notified to : (i) delete the email and all copies; (ii) not disclose, distribute or use the email in any manner; (iii) notify the sender immediately. Thank you.

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20241029/87c50c0a/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.jpg
Type: image/jpeg
Size: 861000 bytes
Desc: image001.jpg
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20241029/87c50c0a/image001-0001.jpg>