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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link="#0563C1" vlink="#954F72"><div class=WordSection1><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Sherry/Dwight<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Believe me practicing in Grant County with the positions taken by our treasurer on these issues has been exasperating to say the least. We wholeheartedly endorse this proposed change.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Does the proposed change exempt the transfer of community property between spouses that occurred by operation of law, let’s say 10 years ago, by reason of the death of one of the spouses? Our wonderful treasurer continues to tax such transfers that occurred prior to the enactment of RCW 82.45.197 and the accompanying WAC. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Thanks, <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Brian Dano<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><b><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><img width=207 height=55 id="Picture_x005f_x0020_2" src="cid:image001.gif@01D13BDD.B62982C0" alt="cid:image001.gif@01CB9521.A4B69680"></span></b><b><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p></o:p></span></b></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>100 E. Broadway<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>P.O. Box 1159<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Moses Lake, WA 98837 <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Ph: 509-765-9285<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Fax: 509-766-0087<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>email: <a href="mailto:vicki@danoharper.com">bricyn@danolawfirm.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Estate & Family Business Succession Planning<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Probate & Trust Administration<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Real Estate(Ag & Commercial) & Escrow Closings<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>LLC Creation, Organization & Maintenance<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'>Business/Commercial Transactions & Escrow Closings <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:20.0pt;font-family:"Arial Rounded MT Bold","sans-serif";color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'> wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com] <b>On Behalf Of </b>Sherry Bosse Lueders<br><b>Sent:</b> Monday, December 21, 2015 8:49 AM<br><b>To:</b> wsbapt@lists.wsbarppt.com<br><b>Subject:</b> [WSBAPT] REET Taxation of Transfers of Real Property by Inheritance<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>Section Members, FYI:<o:p></o:p></span></b></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>This message to the Washington real property, probate and trust lawyers is to solicit feedback related to a proposed statutory change. I act as the Co-Chair of the Legislative Committee of the Washington Land Title Association [WLTA].<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>WLTA members propose a statutory amendment that will terminate the burden to pay real estate excise tax [REET] upon transfers of ownership of real property that occur by operation of law due to Wills, trusts, divorces, court decisions, mergers, etc.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>WA law has not been changed to require such transfers to pay REET. The law remains that only sales of real property require payment of REET. There are many changes in ownership that occur by operation of law that are not taxable as sales. Such transfers often require no deed of conveyance or recordation.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Transfers that occur pursuant to devise made by a Will are not taxable. Transfers that occur due to the death of an owner pursuant to the legal effect of intestate succession, community property, joint tenancy, life estates and transfer on death deeds are not taxable. These changes in ownership are not required to pay REET, even if there is no probate or court proceeding. <i>See</i> <span class=breadcrumbclass><a href="http://apps.leg.wa.gov/rcw/default.aspx?cite=82.45.010">RCW 82.45.010</a></span>(3). <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Transfers of ownership that are accomplished pursuant to court orders, such as partition, divorce, condemnation and quiet title, are not taxable. Changes in title to real property that occur by changes in the owner entity that are not sales are not taxable, also as provided by the cited statute.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>In 2008 the Legislature enacted a new statute, now known as <a href="http://app.leg.wa.gov/RCW/default.aspx?cite=82.45.197">RCW 82.45.197</a>. <i>See</i> SSB 6851 and <a href="http://leg.wa.gov/codereviser/documents/sessionlaw/2008pam2.pdf">Chapter 269, Session Laws of 2008</a>. It provided the documentation to be provided to the County Treasurer to claim exemption from REET when the parties wanted to record a conveyance pursuant to inheritance. It begins: <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:.5in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>In order to receive an exemption from the tax in this chapter on real property transferred as a result of inheritance under RCW 82.45.010(3)(a), the following documentation must be provided:<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Verdana","sans-serif"'><o:p> </o:p></span></p><p class=MsoNormal><i>See also</i> <a href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A-202">WAC 458-61A-202</a> related to the exemption from REET for inheritance transfers, that states, “<span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>Transfers of real property by inheritance or devise are not subject to the real estate excise tax.</span>”<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>At some point about four years ago a couple County Treasurers [Grant, Skagit & Yakima] began interpreting RCW 82.45.197 as authority to require heirs who receive title by inheritance to pay REET if they did not have proper documentation. The position taken was that a probate was required to avoid REET. This affected only a few people because most intestate and non-probate heirs were not recording documents and not filing excise tax affidavits.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>However, due to changes made by the Department of Revenue to its Regulations related to REET, all transfers by operation of law are now required to file an excise tax affidavit. Previously, the Regulations required an excise tax affidavit and specified the documentation that was required to claim exemption from REET for transfers by operation of law <i>only when conveyance documents were recorded</i>.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>A change was made February 28, 2014 to WAC <a href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A&full=true#458-61A-303">458-61A-303</a> [the regulation that explains when a real estate excise affidavit is required]. It was not made due to a change in the substantive law. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>WAC 458-61A-303 Affidavit. (1) Introduction. This section explains<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>when a real estate excise tax affidavit is required for the<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>((<s>conveyance</s>)) <u>transfer</u> of ((<s>an interest in</s>)) real property. See WAC<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>458-61A-101 for procedures pertaining to transfers and acquisitions of<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>a controlling interest in an entity owning real property in the state<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>of Washington. (2) Affidavit required. In general, an affidavit must be filed<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>when ownership or title to real property transfers as evidenced by<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'>conveyance, deed, grant, assignment, quitclaim, <u><span style='background:yellow;mso-highlight:yellow'>or any other document<o:p></o:p></span></u></span></p><p class=MsoNormal style='margin-left:.5in'><u><span style='font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow'>effectuating the transfer</span></u><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'> including, but not limited to, the following:<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow'>(b) ((<s>Conveyance</s>)) <u>Transfer</u> resulting from a court order;<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow'>(g) ((<s>Conveyance</s>)) <u>Transfer</u> to an heir in the settlement of an<o:p></o:p></span></p><p class=MsoNormal style='margin-left:.5in'><span style='font-size:10.0pt;font-family:"Arial","sans-serif";background:yellow;mso-highlight:yellow'>estate;</span><span style='font-size:10.0pt;font-family:"Arial","sans-serif"'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Verdana","sans-serif"'><o:p> </o:p></span></p><p class=MsoNormal>In the past two years, increasing number of County Treasurers are actively enforcing the payment of REET for inheritance transfers. When heirs sell the property, the Treasurers are requiring excise tax affidavits related to the prior change of ownership, regardless of the amount of time. If the documentation isn’t perfect, the heirs as sellers must pay REET and penalties before the intended sale may be recorded. <o:p></o:p></p><p class=MsoNormal><br>The protests of these people are increasing, in part because Snohomish County, a more populous county, has begun to tax the higher volume of such prior transfers.<o:p></o:p></p><p class=MsoNormal><br>The WLTA proposes to amend RCW 82.24.197 to expand the potential documentation that will satisfy their right to claim exemption from REET. At the same time, WLTA seeks to clarify that all transfers by operation of law do not require excise tax affidavits and recordation of affidavits in order to avoid REET.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>If you have comments or questions, or if you are interested to contribute to the legislative process, please contact me or the representatives of the RPP&T Section.<o:p></o:p></p><p class=MsoNormal><b><o:p> </o:p></b></p><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060'>Dwight A. Bickel<o:p></o:p></span></b></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060'>Legislative Committee Co-Chair<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:#002060'>Washington Land Title Ass'n<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray'>701 - 5th Avenue, Suite 2300<br>Seattle, WA 98104<br>Phone: (206) 370-3189</span><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:navy'><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray'>E-mail: </span><span style='color:#002060'><a href="blocked::mailto:Dwight.Bickel@fntg.com"><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray'>Dwight.Bickel@fntg.com</span></a></span><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";color:gray'><o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>