[WSBARP] Assignment of Lease upon death

Tue Aug 2 19:46:47 PDT 2016

Hi David:
No, the lease does not mention heirs, etc.  The clients (lessors) intend to leave their real property with adjacent tidelands to their daughter (possibly via TODD).  They hope to assign the lease to their daughter upon their deaths as well.  They do not want to transfer the property or assign the benefit of the lease until their deaths.  Could the couple could simply execute an assignment of their rights to receive payments under the lease to take effect upon the second spouse’s death (with the real property transferred via transfer on death deed).  Then, couldn't the Personal Representative (also sole beneficiary) present the assignment to the lessee following death of both her parents. Is there any reason this would not be effective? Would a probate be required?  Has anyone done this?  
Thanks,
Margaret

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of david at vaughanlawonline.net
Sent: Tuesday, August 2, 2016 2:14 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Assignment of Lease upon death

Does the lease have common language defining the lessor (such as, A and B, and their heirs, successors, and assignees)?  If so, the property and lease payments pass to the heirs upon death, though they'd be probate assets.  Or was the intent to separate the right to receive lease payments from property ownership?

There are myriad ways to do this, but I'd think the parties intent as to which interests to pass to whom (the property and the lease payments) and tax implications are significant factors to consider.  An inter vivos transfer, whether to a person or trust, can have gift or estate tax implications.  If property and lease payments are to travel together, an inter vivos transfer to the sole heir, reserving a life estate to the property (which would include lease payments), would seem to effectuate a transfer of the property as a gift, at a value which could be discounted for the reserved life estate, and take it out of probate, albeit at the price of using some of the couple's lifetime gift exclusion.  There also might be real estate excise tax due on the transfer.  I think this can be accomplished with a Quitclaim Deed reserving the life estate.

http://www.washingtonlawhelp.org/files/C9D2EA3F-0350-D9AF-ACAE-BF37E9BC9FFA/attachments/39297585-C160-3315-4545-295BD7475F68/6260en_quitclaim-deeds-and-life-estates.pdf

-------- Original Message --------
Subject: Re: [WSBARP] Assignment of Lease upon death
From: Richard Holland <rich at pnwle.com>
Date: Tue, August 02, 2016 10:14 am
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>

I am sure there are 100 ways to do this but couldn’t they assign the lease to an LLC or Trust right now?  (I don’t know about Trusts, I am honestly thinking more about an LLC).  The LLC documents would then govern the transfer of the ownership interests and I should think there is a way to draft the Operating Agreement where those would pass outside of probate although wiser heads than mine might have more guidance in that regard.

Thanks,

Rich Holland
rich at pnwle.com
733 7th Avenue, Suite 110
Kirkland, WA 98033
425-836-6240  / 425-748-3901 (fax)

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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Margaret Delp
Sent: Monday, August 01, 2016 3:33 PM
To: WSBARP at lists.wsbarppt.com; WSBAPT at lists.wsbarppt.com
Subject: [WSBARP] Assignment of Lease upon death

Hello everyone:
I am working on an estate plan for a married couple.  They are the lessors in a 30-year Tidelands Lease.  In the event of their demise, they would like their only heir to receive the right to payments from lessee (shellfish company).  The lease includes provisions reserving the right of the lessor to assign the agreement by giving advance written notice to lessee.

What is the best way to handle this?  Can one assign a lease effective upon death?

I should also note that the couple hopes to have a very simple estate plan which also avoids probate.   We are considering simple wills with a  transfer on death deed for the property adjacent to the tidelands. 

Thanks,
Margaret

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