Re: Land Trusts in the Keystone State… - Posted by Bill Gatten
Posted by Bill Gatten on April 06, 1999 at 19:23:05:
Here is my take on this issue.
My understanding is that the expression “living” trust is a generic term given to any trust created during the lifetime of the Settlor (i.e. synonymous and interchangeable with the term “inter-vivos” trust). The obverse would be “testamentary” trust (i.e., designed to be effective after, or upon, the death of the Settlor).
However, the common useage (art) of the expression, “living trust,” relates today to the inter vivos estate planning vehicle known as the Estate Trust or Credit Shelter Trust, or (more commonly) the Inter Vivos Family Trusts… all essentially the same thing.
Now… with respect to the Penna. R&TC (Revenue & Tax Code), distinguishing between “inter vivos trusts” and land trusts (which are clearly inter vivos), their actions most likely infer that they are targeting living trusts in general: i.e., trusts in which ALL of the beneficiary interest and Power of Direction is being transferred (conveyed) to another.
Not having the the code and its new changes before me, I’m functioning only under wheat straw logic here; however, it would appear that to solve your problem (dilema?), you could easily just set the land trust up in the name of your seller, and have him assign the beneficiary interest to you at a later time (say, in another 12 minutes). Obviously, in this scenario, you end up with 100% of everything (tax w.o., principal reduction, appreciation, tax write-off, saleability, etc.): but as far as the County Recorder’s office is concerned, the property itself has not been transferred, except to the owner’s own inter vivos trust…without relinquishment of any real property obligations, rights or benefits.
Think about it like this: Joe Seller creates an (inter vivos) land trust for estate planning purposes, and sends a copy to the recorder’s office along with the Preliminary Change of Ownership Report (the owner is now trust in his own name). Is that a taxable transfer or conveyance?
Upon the advice of his attorney, he names a remainder agent or co-beneficiary for the trust. Is that a taxable transfer or conveyance?
Next, he gives the co-beneficiary full authority to vote his “Power of Direction” until the scheduled termination date. Is that a taxable transfer or conveyance?
Hope this helps. 'Hate to see anyone doing wraps and all the stuff that makes eviction impossible, jeopardizes one’s legal health, and exposes one to the seller’s potential untoward actions (e.g., lis pendens) on down the line.
But bear in mind that I’m not an attorney… I just play one on TV.