Discussion Forum

Randy Hughes
SFH Master Advisor

Re:T.I.N, Land Trusts, and IRS

Sunday, November 23 2008 11:19 AM

DAVID,

SEE MY COMMENTS BELOW IN BOLD.

RANDY



TYPE-1:
- Seller sells property to our trust.  This makes the trust irrevocable (correct?)  NO, THE STRUCTURE OF THE TRUST AGREEMENT IS WHAT MAKES A TRUST REVOCABLE OR IRREVOCABLE

- The trustee in one of our corporations and our partners are the beneficiaries.  The seller holds no interest in the property or in the trust.

Is a TIN required in the TYPE-1 situation? NO.  

We have spoken to several 'experts' and we obtain conflicting answers.  Some say no, but some say yes we are required to obtain a TIN since the trust is now irrevocable. SEE MY COMMENT ABOVE.

___________________

TYPE-2:
- Transferor is NOT selling the property to the trust, simply transferring title to it.  (Like an intervivos trust).  This makes the trust revocable by the transferor. (correct?) IF THE TRANSFEROR PUTS PROPERTY INTO TRUST WITH BENEFICIARIES THAT WERE NOT OWNERS BEFORE THE TRANSFER THEN, HE HAS "GIFTED" EQUITY TO THE OTHER BENEFICIARIES CALCULATED UPON THEIR BENEFICIAL INTEREST PERCENTAGE...AND A GIFT TAX MAY APPLY (IF THE VALUE IS OVER 12,000).

-Transferor is the trustee and also one of the beneficiaries.  I WOULD NEVER HAVE THE TRANSFEROR BE THE TRUSTEE (FOR PRIVACY REASONS) AND BENEFICIARY AT THE SAME TIME (A JUDGE COULD EASILY CONSIDER THIS A "MERGING OF INTERESTS" AND DECLARE THE TRUST VOID.

Is a TIN required by the IRS in the TYPE-2 situation?  All of our research (including your awesome land trust courses) point to NO-TIN required in this situation because the trust is revocable. TRUE

I thank you in advance for your time and guidance!  Love your website!
THANKS...TELL EVERYONE YOU KNOW WE WANT TO BE YOUR NUMBER ONE SOURCE FOR ACCURATE LAND TRUST INFORMATION

Randy Hughes

REPLY