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).
From: Rick Vesole
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?
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.