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<p class="MsoNormal"><a name="_GoBack"></a><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">To add to Mike’s thoughtful comments. As long as the trust incorporates RCW 11.98.070, you have non pro rata powers. You may need to
open a probate to transfer the parents’ interests in the FLP to the RLT because the facts appear to suggest the parents are the partners. Otherwise, I think you run into the problem if you are transferring straight from the FLP to the children and then children
start horse trading between themselves or with the other assets of the RLT. <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>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="text-align:justify"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Marcus J. Fry<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Lyon, Weigand & Gustafson, P.S.
<br>
P.O. Box 1689 <br>
Yakima, Washington 98907 <br>
Telephone: (509) 248-7220 <br>
Facsimile: (509) 575-1883 <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><u><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D"><o:p><span style="text-decoration:none"> </span></o:p></span></u></b></p>
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<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>Mike Winslow<br>
<b>Sent:</b> Thursday, January 07, 2021 5:07 PM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv'<br>
<b>Subject:</b> Re: [WSBAPT] Excise tax on inherited properties of FLP and RLT<o:p></o:p></span></p>
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</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">No specific experience with what you describe, but a couple of suggestions:<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>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">First, I would look at the RLT to see if non-prorata distributions are permitted from the parents’ trust. I would also look at the probate code, as I think
there is a statute that allows non-prorata distributions (cannot cite off top).<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>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Second, I wonder if the RLT really requires specific distributions of the
<u>properties</u> equally to the kids. More likely it says that the kids receive equal
<i>shares </i>of the trust assets, which could be completed under the non-prorata scheme.<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>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Third, the properties in the FLP could possibly be deeded out of the FLP to parents’ RLT, as that may qualify as a non-recognition transaction.</span>
<span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><a href="https://app.leg.wa.gov/wac/default.aspx?cite=458-61A-211">https://app.leg.wa.gov/wac/default.aspx?cite=458-61A-211</a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Once in the RLT, then proceed with the non-prorata distribution plan.<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>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Revenue is always going to tell you then want excise tax.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">I see potential to avoid a lot of excise tax with nine parcels being involved, and suggest this is worth looking at, and possibly even consulting with an excise
tax specialist in one of the big firms.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">This is all ‘off the top’, but based on dealing with a lot of excise tax exemptions.<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>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Michael A. Winslow<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">1204 Cleveland Ave.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Mount Vernon, WA 98273<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Ph. 360-336-3321<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Em. Mike@winslegal.com<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>
<p class="MsoNormal"><span style="font-size:11.0pt;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
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<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<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>Kira Rubel<br>
<b>Sent:</b> Thursday, January 07, 2021 3:20 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv<br>
<b>Subject:</b> [WSBAPT] Excise tax on inherited properties of FLP and RLT<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">Hello list! <o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><o:p> </o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">I have three clients who <span class="gmail-il">inherited</span> 9 <span class="gmail-il">properties</span> from their now-deceased parents, <span class="gmail-il">out</span> of
the parents' Family Limited Partnership and the parents' living trust. Now, we're in the process of transferring title to each child's LLC or living trust. <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">The parents did not leave specific <span class="gmail-il">properties</span> to specific kids, rather all <span class="gmail-il">properties</span> were left to all three children. The
three adult children decided among themselves how to divide up the <span class="gmail-il">properties</span> (and cash). Each child is taking 3 <span class="gmail-il">properties</span> in their entirety. <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">My office spoke with the DOR-<span class="gmail-il">Excise</span> <span class="gmail-il">Tax</span> department and they said we might have an <span class="gmail-il">excise</span> <span class="gmail-il">tax</span> problem
for 2 reasons. One, all properties were left to all 3 kids to divy up as they please. Two, is it even possible to transfer the properties directly from the parents' FLP/RLT to each child's LLC or own living trust? <o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">Has anyone done this in practice? I'm concerned about getting the WAC exemption correct!<o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">Many thanks! <o:p></o:p></p>
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<p><i><span style="font-size:13.5pt;font-family:"Cambria","serif"">Kira M. Rubel, Esq.</span></i><o:p></o:p></p>
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