[WSBARP] REET and TEDRA Agreement Question

[David Moe]

I agree with Bryce.  Also, under WAC 458-61A-202, see Subparagraph (5)(c) Example 4, under “Subsequent transfers,” where ‘Sheri’ wants sole ownership and her two sisters want cash in lieu of their respective 1/3 shares—but there are no (or in Gabriel’s case) insufficient other distributable estate assets to qualify as acquired in a (fully) nonpro rata distribution.  There,  all the real estate excise tax is reported and paid under a  “prior” separate deed from Sheri’s sisters to the estate PR as grantee; then, to complete the distribution, the estate PR can then make a separate deed from the estate to Sheri whereby she acquires sole ownership and by the REETA can simply claim “inheritance or devise.”  No valuable consideration will have passed from the grantee to the grantor.

I have prepared a TEDRA, to be available as “additional documentation” should such be requested by the recording officer or DOR,  or the mortgage lender.  As part of the TEDRA recitals, the dollar values of the “inherited share portion” and the “purchase money” portions can be documented, and the parties can allocate the responsibility for real estate excise tax and other closing costs.  If institutional financing will be involved, the TEDRA might complement or substitute for a purchase and sale agreement, and might help the “borrower” qualify for more favorable “refinance” loan terms, based on the inherited portion.


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From: Bryce Dille<mailto:Bryce at dillelaw.com>
Sent: Friday, May 5, 2023 9:16 AM
To: WSBA Real Property Listserv<mailto:wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] REET and TEDRA Agreement Question

The would be excise tax due see pararaph (3) subsequent transfer under WAC458-61A-202

Bryce H. Dille
Dille Law, PLLC
2010 Caton Way SW Ste. 101
Olympia, WA 98502
Office: 360-350-0270
Cell: 253-579-5561

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Gabriel Dietz
Sent: Thursday, May 4, 2023 4:42 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] REET and TEDRA Agreement Question

Good Afternoon Listmates,

Mom passed away in 2014. Dad passed away in 2022. Daughters A, B, and C are the surviving relatives and beneficiaries under Mom's credit trust. Dad was the trustee until he died. Daughter A is now the trustee. The house is valued at $2.7M in the trust. There is also $800,000 in other assets in the trust. A, B, and C want to distribute the other assets evenly to A and B and distribute the house to C. C would owe A and B $1,533,333.33, or $766,666.67 each as a result from an accounting perspective to make distributions valued the same. Under WAC 458-61A-202 is excise tax due on $1,533,333.33 as payment from C to A and B, for C to take sole title? I thought I would check with those more experienced since I haven't done this exact scenario before.

Thank you,

Gabriel A. Dietz
Partner
Hoerschelmann Dietz PLLC
p: (206) 451-3859
f: (206) 337-4506
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