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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>Thanks, Mike, for your response. Patrick, to answer your questions—this is not a distribution from the trust, it is a transfer in satisfaction of a debt. Otherwise, at client’s death, client’s estate would hold all these promissory notes and would have to have to collect on them from the successor trustees/remainder beneficiaries. Since there are no other assets in the trust, the property would have to be sold in order to pay the debt off. By transferring now, the debt will be paid, the client’s executor will not have to chase down the remainder beneficiaries, and the client’s family can choose to keep the property.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>Eden<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","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>Patrick J. Galloway<br><b>Sent:</b> Wednesday, May 18, 2016 2:59 PM<br><b>To:</b> WSBA Probate & Trust Listserv<br><b>Subject:</b> Re: [WSBAPT] RE Excise Tax question<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>This one has me curious. I am not sure I understand the fact pattern or the estate planning strategy that was being implemented. Is there a tax benefit that was gained from the promissory notes? Is this an attempt to avoid claims of other beneficiaries of the trust? Is the client not a beneficiary of the trust?<o:p></o:p></span></p><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'><o:p> </o:p></span></p></div><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>Can the trust simply make the distribution and dissolve? I am not sure why you would need to pay REET on a gift/inheritance and what the benefit of making the transfer for consideration is. Just looking for some education from the group on this one.<o:p></o:p></span></p></div><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'><o:p> </o:p></span></p></div><div><p class=MsoNormal style='margin-bottom:12.0pt'><span style='font-family:"Calibri","sans-serif"'>Thanks,<o:p></o:p></span></p><p class=MsoNormal><strong><span style='font-family:"Calibri","sans-serif";color:black'>Patrick J. Galloway</span></strong><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:black'>Advance Legal Services, PLLC</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:black'>8113 W. Quinault Ave. Suite 101</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:black'>Kennewick, WA 99336</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:black'> </span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:black'>(509) 851-7884</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'> <a href="http://www.alsnorthwest.com" target="_blank">www.alsnorthwest.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>This E-Mail message and any documentation accompanying this transmission may contain privileged and/or confidential information and is intended solely for the addressee(s) named above. If you are not the intended addressee/recipient, you are hereby notified that any use of, disclosure, copying, distribution, or reliance on the contents of this E-Mail information is strictly prohibited and may result in legal action against you. Please reply to the sender advising of the error in transmission and immediately delete/destroy the message and any accompanying documents. Thank you.<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'><o:p> </o:p></span></p><p class=MsoNormal style='background:white'><span style='font-size:11.5pt;font-family:"Calibri","sans-serif";color:#444444'>*_Important Disclosures Regarding Email Communications_*<o:p></o:p></span></p><p class=MsoNormal style='background:white'><span style='font-size:11.5pt;font-family:"Calibri","sans-serif";color:#444444'>Advisory services through Retirement Wealth Advisors, Inc., a SEC Registered Investment Advisor. This Email is being sent by or on behalf of a Registered Investment Advisor. It is intended exclusively for the individual or entity to which it is addressed. This communication may contain information that is proprietary, privileged, or confidential, or otherwise legally exempt from disclosure. If you are not the named addressee, you are not authorized to read, print, retain, copy or disseminate the Email or any part of it. If you have received this Email in error, please notify the sender immediately by Email or fax, and destroy all copies of this communication. Please be advised that you may conduct securities transactions only by speaking directly with your Investment Advisor Representative either by phone or in person. Requests for securities transactions via email will not be executed by Retirement Wealth Advisors, Inc. To help protect your privacy, we strongly suggest you avoid sending sensitive information, such as account numbers and social security numbers via Email. Please be further advised that, pursuant to the Bank Secrecy Act, the USA PATRIOT ACT, and similar laws, any communication in this email is subject to regulatory, supervisory, and law enforcement review.<o:p></o:p></span></p><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'><o:p> </o:p></span></p></div><p class=MsoNormal style='margin-bottom:12.0pt'><span style='font-family:"Calibri","sans-serif"'><o:p> </o:p></span></p><div><div class=MsoNormal align=center style='text-align:center'><span style='font-family:"Calibri","sans-serif"'><hr size=3 width="100%" align=center id=stopSpelling></span></div><p class=MsoNormal style='margin-bottom:12.0pt'><span style='font-family:"Calibri","sans-serif"'>From: <a href="mailto:mike@winslegal.com">mike@winslegal.com</a><br>To: <a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a><br>Date: Wed, 18 May 2016 14:06:27 -0700<br>Subject: Re: [WSBAPT] RE Excise Tax question<o:p></o:p></span></p><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>Under the provisions of the Real Estate Excise Tax rules the transfer of the interest is for <i>value</i>, equal to the relief from debt, so would be subject to tax as a “sale”. If there is remaining debt, that debt is not part of the consideration paid for the transfer.</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'><a href="http://app.leg.wa.gov/wac/default.aspx?cite=458-61A-102" target="_blank">http://app.leg.wa.gov/wac/default.aspx?cite=458-61A-102</a></span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>see the definition of <i>consideration </i>and <i>sale</i>.</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'> </span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>Michael A. Winslow</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>1204 Cleveland Ave.</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>Mount Vernon, WA 98273</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>Ph. 360-336-3321</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>Em. <a href="mailto:Mike@winslegal.com">Mike@winslegal.com</a></span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'> </span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'>This message is from an attorney, so it’s confidential. If you are not the intended recipient, it’s too late to stop reading this message, but you may not use it for any improper purpose. Huge Disclaimer available upon request.</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p></div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:#1F497D'> </span><span style='font-family:"Calibri","sans-serif"'><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"'> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Eden Rubenstein Toner<br><b>Sent:</b> Wednesday, May 18, 2016 1:28 PM<br><b>To:</b> WSBA PT list<br><b>Subject:</b> [WSBAPT] RE Excise Tax question</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p></div></div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>I’m trying to figure out the RE excise tax computation in this situation: Client owns ˝ interest in property. A testamentary trust of which client is Trustee owns the other ˝. There are no other assets in the trust. Client occupies the property and has paid mortgage, taxes, insurance and all expenses for many years, keeping track of all payments and issuing a promissory note from the trust to client each year. The trust is now indebted to client for more than the value of the trust’s interest in the property. Client wants to deed the property from the trust to client in full satisfaction of the debt, despite the fact that the debt is greater than the value of the property.<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>Questions—is tax due on the full amount of the debt being satisfied, or just the actual amount satisfied? Does it matter that the debt is not secured by the property? And if client continues to pay the full amount of the mortgage, is half the outstanding mortgage value part of the excise tax computation?<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>Thank you in advance for any guidance.<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'>Eden<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'> <o:p></o:p></span></p><p class=MsoNormal><i><span style='font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in'>Eden Rubenstein Toner</span></i><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><i><span style='font-size:10.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in'>Attorney at Law</span></i><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><i><span style='font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in'>1600-B SW Dash Point Road, #163</span></i><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><i><span style='font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in'>Federal Way, WA 98023</span></i><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><i><span style='font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in'>phone 206-953-4485</span></i><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in'> IMPORTANT: This e-mail message (and any attachments accompanying it) is intended to be confidential, only for the use of the intended recipient(s). If you are not the intended recipient, or if this message has been addressed to you in error, please notify me by reply e-mail, and then destroy all copies of the message and its attachments, if any. Your cooperation is greatly appreciated. My email is not encrypted; if you have sensitive information to transmit, please contact me before sending.</span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif";color:black;border:none windowtext 1.0pt;padding:0in'> </span><span style='font-family:"Calibri","sans-serif"'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'> <o:p></o:p></span></p></div><p class=MsoNormal><span style='font-family:"Calibri","sans-serif"'><br>_______________________________________________ WSBAPT mailing list <a href="mailto:WSBAPT@lists.wsbarppt.com">WSBAPT@lists.wsbarppt.com</a> <a href="http://mailman.fsr.com/mailman/listinfo/wsbapt">http://mailman.fsr.com/mailman/listinfo/wsbapt</a><o:p></o:p></span></p></div></div></div></div></body></html>