Posted by JHyre in Ohio on April 14, 1999 at 06:21:41:
and love animals, don’t eat th…Oh, who am I kidding- whack away! I enjoy your twisted humor…hows about a bumper sticker next to the PWA one (Parakeet Whackers Anonymous, for the non-initiated)- EARTH FIRST, We’ll strip mine the other planets later.
John Hyre
LAND TRUST DEAD GUY - WHO PAYS INHERITANCE TAX - Posted by Bill Gatten
Posted by Bill Gatten on April 08, 1999 at 22:16:15:
A repost of Rick’s question and my answer… apparently several folks were interested in getting an answer to this one (sorry).
-----Original Message-----
From: Rick Vesole
To: bill@cal-equity.com
Date: Thursday, April 08, 1999 11:24 AM
Subject: Sending my 4/3/99 post to you.
Hi Bill. I was wondering if you were going to respond to my earlier post. I was curious if you had any opinion in this area. Lets say that you have real estate in one state and an out-of-state beneficiary. The beneficiary dies and the trust provides that upon death, the property passes to the benefit of the beneficaries spouse and/or children. Do you know which state has jurisdication for taxation as far as inheritance taxes go?
Is it the state with the R.E. in it or is it the state where the beneficiary resided?
-0-
Rick,
This is a good question. Sorry I missed it. The followintg is not intended to be legal advice (I’m not an attorney… people love me).
#1. Because of the advantage of avoidance of Ancillary Aministration of a land trust upon the demise of a Beneficiary, the estate will be probated in the state of the beneficiary’s domicile. Even in its simplest form, a land trust Trustee is to recognize this “devolution,” and deal with it in exactly the same manner as it would stocks, bonds, securities and other personal property interests (re. Corcoran “Alternative to Probate,” Sec #20.5 (IICLE, 1971) and Kenoe on Trusts (speaking of dead guys). It is also uniformly recognized (all states) that beneficiary interest is a properly drawn land trust is transmitted by probate administration in the domicile of the beneficiary (the dead guy).
#2. A beneficiary interest in a land trust is classified as “intangible personalty” and, as such, is taxed for inheritance tax purposes in the state of domicile (for the legal beagles, see: Estate of McCalmont, 16Ill.App.2d 246, 148 N.E.2d 23 1958; and a ho bunch’a others [Levine/Pascal; People vs. Foreman, etc.].
Hope this helps. I’ll be quicker next time.
Bill
Re: LAND TRUST DEAD GUY - WHO PAYS INHERITANCE TAX - Posted by Bronchick
Posted by Bronchick on April 09, 1999 at 13:00:07:
In a most states, the beneficiary pays inheritance tax (if any) in the state wherein he dies.
Oddly enough, the case law rulings in some states have been based on this issue. For example, CA law called the beneficial interest in a land trust “personal” property so that they could tax the decedent in CA. The LA court came to the opposite result when the decedent died in IL with property in LA (that is why land trusts are not recognized in LA).
If you are using a land trust for estate planning (not the best idea) the most important factor is to make certain that the trust complies with your state’s probate code. Otherwise, upon death, if challenged, the court may treat it as a “dry” trust and treat the property as being in the name of decedent upon death.
Re: avoiding estate taxes - Posted by Rene Perrin
Posted by Rene Perrin on April 09, 1999 at 06:45:14:
Bill-
I had wanted to ask about one of your earlier statements regarding the avoidance of estate taxes. Could you address that a bit? Thanks!
Rene
Bill, just wanted to say a few words - Posted by Jim IL
Posted by Jim IL on April 08, 1999 at 23:53:26:
You know it never ceases to amaze me the selfless sharing of knowledge that happens on this board.
There are MANY great experienced investors (a post listing them would shut down the server here) that devote much time and patience to us “newbies”, when we all know that they could be doing something else, and something more cost effective. (Time is money, and your donation is GREAT!)
So, I just wanted to say thank you for sharing. I have yet to employ some of your methods, but when faced with a situation where they are the best route, I now feel confident that I have a better idea of “how”.
I just had to comment, because I saw how you closed and said, “Hope this helps. I’ll be quicker next time.”
Unbelievable!
Apologizing for answering “not so fast”. Just answering at all is appreciated by all.
Thanks for being such a MENTOR.
God Bless,
Jim IL
Re: LAND TRUST DEAD GUY - WHO PAYS INHERITANCE TAX - Posted by Bill Gatten
Posted by Bill Gatten on April 09, 1999 at 16:18:12:
Bill, great information. Thanks.
I’m still a bit puzzled though. Do you happen to know the cite on this, or where I can look? As I’m sure you’re aware (better than I), there is an Appellate “District” Court in LA and a Superior Court… the reference to “the LA Court” per se was probably just a slip, as obviously there would be no precedential value in a Superior Court ruling.
I think I may vaguely remember the case you’re referring to (one of relatively few land trust cases mentioned in CA.), and recall that the trust documentation was found to be defective relative to powers vested in, or relative to, the Trustee (but I’m not even close to being certain).
And, too, re. LA’s not recognizing land trusts re. probate issues as pertinent to Personalty: I’m very unclear on that, but would think that perhaps a co-beneficiary or remainder agent relationship would rectify the problem (?). In the case you’re referring to, was the trust deemed Dry, as the justification for forcing Anciallary Administration of the estate?
Currently, I’m looking at Smith vs. BofA Nat. Tr./Sav; and Ephraim v. Metro. Trust. Co.: those cases have green stuff growing on them (1936 and 1946): I have “Estate of Tutules,” too, but even that’s 36 years old, and the sections referred to Ca. Civ. Codes 863 to 867 have since been repealed. Right now I’m also trying to find Calif. Estate Admin. (haven’t yet) re. Secs 33.11-35… but that’s old too–1959. I haven’t seen any specific mention in the Probate Code on this subject either… but will keep looking.
I humbly defer to your knowledge on this one.
Thanks Bill.
Bill G.
Re: LAND TRUST DEAD GUY - WHO PAYS INHERITANCE TAX - Posted by Bronchick
Posted by Bronchick on April 12, 1999 at 09:17:45:
Estate of Tutules, 22 Cal.Rpt. 427, is still good law in CA (it was recently cited as authority in Walgren v. Dolan 276 Cal.Rptr. 554). The important part of the decision is that it recognized that the beneficial interest in a land trust is personal property that goes where the beneficiary goes. CA does not recognize the “statute of uses,” so the “dry trust” issue is not relevant in CA.
The LA court in Charles Land Trust v. St. Armant, 217 S.2d. 385, did not have an issue with the duties of the trustee, but rather the beneficial interest being personal property. They simply declined to follow IL land trust cases. They wanted to achieve this result because the land was in LA, so the state of LA could get the tax.
Re: LAND TRUST DEAD GUY - WHO PAYS INHERITANCE TAX - Posted by JPiper
Posted by JPiper on April 09, 1999 at 16:38:56:
Bill:
My impression is that Bronchick is referring to Louisiana…and that you’re referring to Los Angeles…both LA.
JPiper
Re: LAND TRUST DEAD GUY - WHO PAYS INHERITANCE TAX - Posted by Bill Gatten
Posted by Bill Gatten on April 09, 1999 at 17:41:41:
Phew! Thank you Jim… I owe you one. That’s all I need is to find out that land trusts in Los Angeles don’t work.
I’ve had enough whacking for one day on CREO. I think I’ll go flatten my wife’s parakeet with a wooden mallet again. Usually helps, and saves us money on the hard drugs (and 'Lord lord knows, we can always use the feathers).
Bill