1031 exchange beneficial interest in trust
Dear Steve: The reason you would want to exchange the beneficiary interests is for
anonymity. Bill puts out a lot of information on wealth preservation. Of
course when you do this you would want to assign another successor trustee
to take care of the respective trusts. The trust do not have a separate tax
ID number. They file under the individual Social Security number. In the
state of Washington there's a lot of nice things that can be accomplished if
you just exchange the beneficiary interests leaving the trusts in place.
For one thing it's a very simple transaction. You don't have to have escrow
as long as the properties are free and clear. Bill said that he exchanged a
property like this himself. I'm just wondering if he's the only one in the
world that does anything like this. Or is he creating a tax liability he
does not know about. Or if he's full of hot air. Thanks, Brad
anonymity. Bill puts out a lot of information on wealth preservation. Of
course when you do this you would want to assign another successor trustee
to take care of the respective trusts. The trust do not have a separate tax
ID number. They file under the individual Social Security number. In the
state of Washington there's a lot of nice things that can be accomplished if
you just exchange the beneficiary interests leaving the trusts in place.
For one thing it's a very simple transaction. You don't have to have escrow
as long as the properties are free and clear. Bill said that he exchanged a
property like this himself. I'm just wondering if he's the only one in the
world that does anything like this. Or is he creating a tax liability he
does not know about. Or if he's full of hot air. Thanks, Brad
Dear B: I appreciate all of the additional information. These trust appear to be disregarded entities. You describe the other benefits of swapping beneficial interests. As long as everyone is comfortable closing without escrow, then I see no reason not the exchange beneficial interest in the trust, trade trustees, and rewrite the trust documents to suit yourselves. This would in fact be two 1031 exchanges from a tax reporting standpoint. Is there a trust registration process in WA? If so then the transaction might need to be reported somehow in WA. That would be the case in CO. Remember to review the existing trust documents and make that they can be freely amended. You don't want to take over the beneficial interest in a trust that cannot be amended to suit you. Sincerely,
Steve Hickox
Attorney / President
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posted by 1031ExchangeBlog at
9:02 AM
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