[WSBARP] Erroneous Deeds-Title gurus

[Paul Neumiller]

Mom signs deeds (prepared by an attorney, no less) that state that Mom, as trustee of the Mom Trust, quitclaims real property to Mom, as manager of the Mom LLC.   HUH?!?!?!?  Ok, the Mom LLC is properly formed with Mom as manager but Mom does not hold any LLC units.  Mom is elderly and the family wants to take advantage of the step-up in basis for the real property.  My conclusion is that the deeds are erroneous because the LLC is a legal entity and can take ownership in the real properties outright.  The deeds should not have said to Mom as manager of the Mom LLC but simply to the Mom LLC directly.  And my quick research indicates that a member in a LLC does get a step up in basis but only to the extent of that one member (and surviving spouse) BUT, remember, Mom is only the manager and not a beneficial member of the LLC.



So, the family and Mom wants the real property cleanly BACK into the Mom Trust.  Should the family:  1) do nothing because the deeds from Mom as trustee to Mom as manager of the LLC will have no legal impact (seems risky, maybe a court will say the deeds are wrong but the default is that MOM holds the property outright) OR 2) record deeds from Mom as manager of the LLC to Mom as Trustee of the Mom Trust?   If we record new deeds, what exemption is there for the real estate excise tax?  Correction deed?  Gift deed?  Say we are only unringing the bell?



[Paul A_ Neumiller2]


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