[WSBARP] Erroneous Deeds-Title gurus

[Mark Anderson]

I'm not confident that WAC 458-61A-211(5) would be of much help, given that Mom was only the manager of the LLC and did not own any membership units in the LLC.  The answer might be different if the Trust held the membership units.

That said, WAC 458-61A-209 might help here, even though consideration may not have been paid in the first place.  To cover the bases for conveyance back to the Trust, I would name both "Mom, as Manager of the Mom LLC" and "Mom LLC" itself.  This should cover any interpretation by which the LLC or Mom herself acquired any interest.

A CPA is likely the best resource for the impact fn these transactions on tax basis.

Mark B. Anderson
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of John McCrady
Sent: Thursday, August 12, 2021 2:50 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Erroneous Deeds-Title gurus

The deed was certainly created amiss, but I don't think the LLC's intended interest can be ignored.  If Mom and Mom's family want title back in the Trust I would think that a deed from Mom LLC to the Mom as Trustee of the Mom trust would be in order.  Perhaps WAC 458-61A-211 (5) has the flexibility to fit your fact pattern.

John McCrady
Counsel
Puget Sound Title Company
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University Place WA 98467
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Paul Neumiller
Sent: Thursday, August 12, 2021 1:29 PM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Erroneous Deeds-Title gurus


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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