Laws, Regulations & Annotations

P

625.0000 PARENT-CHILD TRANSFER

Annotation 625.0235.030

625.0235.030 Trusts—Share and Share Alike. In order to equalize the dollar value of distributed interests to Child A and Child B, it is proposed that Child A, as the trustee, obtain a loan from Child B. In exchange for the loan, Child B will receive a promissory note that is secured by a deed of trust and payable by the trustee. The trustee will then distribute the real property, which is encumbered by the loan, to Child A and make a cash distribution to Child B in an amount equal to the value of the equity in the Subject Property distributed to Child A.

The trust instrument provides for equal distribution of the Subject Property to Child A and Child B and the trust instrument explicitly permits non-pro rata distribution. Also, the proposed non-pro rata distribution will accomplish the trust's instructions of equal distribution between the two children in that Child B will receive cash in the same amount as the equity in the real property that will be transferred to Child A. Finally, Child A, the beneficiary receiving the real property, is not making the loan to the trust to equalize the distribution. As such, the proposed transfer of the real property to Child A would qualify for the parent-child transfer exclusion, assuming all other requirements are met. C 8/10/2015.