[WSBARP] FW: Estate Tax Avoidance

[Joshua McKarcher]

To my understanding, a Transfer on Death Deed does not remove any of the grantor's rights during lifetime or reduce the value of the property in the grantor's hands. It is fully revocable to the moment of death (at least in theory, subject to capacity, etc., but that also has nothing to do with estate tax valuation).

The grantor does not give up anything s/he must "take back" to fully own it again during lifetime. It is not like reserving a life estate or something like that, which indeed may have different valuation at death for estate tax purposes.

I would be very cautious concluding that a property subject to a TODD can be valued at any amount less than fair market value at date of death, just as it would be if it passed through probate. (Of course, if there are multiple tenants or such fun things, then valuation is the deceased person's interest, etc. But in general, I am not aware of any basis to value a property passed by TODD at less than FMV at date of death.)

Best regards, Josh

Joshua D. McKarcher
McKarcher Law PLLC
537 6th Street
Clarkston, WA 99403
(509) 758-3345
(509) 758-3314 (fax)
josh at mckarcherlaw.com<mailto:josh at mckarcherlaw.com>
www.mckarcherlaw.com<http://www.mckarcherlaw.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Roger Hawkes
Sent: Monday, May 10, 2021 5:12 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] FW: Estate Tax Avoidance

If done correctly the todd removes some right, since further action/happenings is needed to fully own it again.  So is there a difference in valuation?

Roger Hawkes, WSBA # 5173
Shoreline Office: 19944 Ballinger Way NE
                                Shoreline, WA 98155
Sultan Office:        423 Main
                                 Sultan, WA 98294

Phone: 206 367 5000; fax: 206 367 4005
Email: roger at law-hawks.com<mailto:roger at law-hawks.com>
Web site: www.hawkeslawfirm.com<http://www.hawkeslawfirm.com/>
[cid:image001.jpg at 01D745C4.4AAA2490]

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Rani K. Sampson
Sent: Monday, May 10, 2021 4:10 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] FW: Estate Tax Avoidance

Hi, Jim,
That TODD is revocable, which means it's not out of their estate.  All I remember from my tax law class is IRS code 2036:  Everything that you own or control at death is part of your estate and taxable.

Also - if you give away the house but still live there, the IRS will look at that with a squinty eye:
https://www.sgrlaw.com/think-you-can-give-away-ownership-in-a-home-and-continue-to-live-there-without-the-value-of-the-home-being-included-in-your-estate-think-again/

Rani K. Sampson
Overcast Law Offices | Attorney
23 S Wenatchee Ave #320, Wenatchee WA 98801 | (509) 663-5588 x 6

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Jim Doran
Sent: Monday, May 10, 2021 12:45 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Estate Tax Avoidance

Death and Taxes:

Married clients are getting old.  They want to know what they can do to shelter their assets from inheritance tax here in Washington.  They have a home worth $600,000.00 and financial assets of roughly $4,000,000.00.  When we do the calculations the inheritance tax would be $301,050.00 upon the death of the second spouse if they do not dispose of any of the assets.  We need to shelter $2,407,000.00.

I have two questions off the bat.  All this talk of Transfer on Death Deeds makes me wonder if they do a TODD will that keep the real property out of the "estate" for purposes of the estate tax?  The second question is if they make specific beneficiaries for $2,407,000.00 worth of their financial investments, will that keep that amount out of the estate tax calculation?

And I do know that as a married couple they can gift $30,000 per year per person, but they don't want to do that for personal reasons.

I am sure there are other ways to do this.  Any ideas that are not too complicated would be appreciated.

I appreciate it.

Jim Doran

James R. Doran
Attorney at Law
100 E. Pine Street -  Suite 205
Bellingham, WA 98225
(360)393-9506
jim at doranlegal.com<mailto:jim at doranlegal.com>
www.doranlegal.com<http://www.doranlegal.com>
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