Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Thursday, June 11, 2020

A Walk Down Memory Lane with the Liquidating Trust

Trust3 Jones, an attorney for Dechert LLP recently wrote an article about his experience re-encountering the Liquidating Trust. In the colorful article, Jones describes the first time he ever "met" the Liquidating Trust and how he was not open to it in the beginning but gave it another shot after the Great Recession arrived. 

Jones explains that after the Recession, he needed a "friend." Jones goes into depth about how the Liquidating Trust became enormously attractive between the years of 2010–2013. Jones discusses how the Trust provided liquidity when there was otherwise little available and facilitated the transfer of unloved assets from unloving new investors. 

Jones explains that now is the time to become reacquainted with the his "old friend" due to the unpredictable course of the pandemic. 

For the remainder of the article, Jones attempts to acquaint the reader with the Liquidated Trust, in which he discusses what exactly a liquidated trust is, how it is structured, and why you might need to befriend such a trust. 

See Richard Jones, A Walk Down Memory Lane with the Liquidating Trust, LexBlog, June 7. 2020. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


Current Events, Estate Planning - Generally, Trusts | Permalink


Speaking of trust liquidation, California is still the only state in America (and this needs to be in place in every state in this country!) where you can avoid property tax reassessment at current rates; capped at 2% taxation basically as long as you own property inherited from parents initially… thanks to good old 1978 CA Proposition 13... Plus – and here is the part about trust liquidity – California business and residential property owners, in addition to having the right to keep parents property taxes, and transfer parents property taxes upon inheriting property, and then inheriting property taxes at the low Proposition 13 two-percent tax rate maximum – can maintain property tax transfer forever as a parent to child transfer, or parent to child exclusion, as long as all requirements for Proposition 58 have been implemented properly. Californians get to maintain a low property tax rate for life. And can even apply for the same tax break on a secondary property inherited from parents. Approval is a formality only.

No other state in America even comes close to this sort of property tax relief. And property taxes in this country, for the most part, is high, for a middle class or working class family! No other state gives us the ability to use a CA Proposition 58 or California Prop 13 type of property tax transfer, with parent to child transfer, or as lawyers like to call it, “parent to child exclusion”.

As a California property owner, we can buyout siblings who wish to sell out, while retaining the same inherited property from parents with a trust loan, and avoid property tax reassessment for that point on, basically forever – covered on a California state government Website like the California State Board of Equalization, that covers Proposition 58, such as https://www.boe.ca.gov/proptaxes/faqs/propositions58.htm Or you can look at business sites like https://cloanc.com/category/prop-58 or a resource blog such as https://propertytaxtransfertrusts.com/ Trust loans working in accord with Proposition 58 or Prop 193 make it possible for heirs and beneficiaries to sell shares of inherited property, a beneficiary buyout of sibling property shares, or as realtors put it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender. The fact is, we need to know our right to use tax breaks... and every property owners in every state should start learning how to buy out beneficiaries' shares of inherited property; and how sibling-to-sibling property transfer works in California.

Once that’s done, every home owner in America should begin a campaign to force their representatives to listen up about how things are done in California. And if they don’t start listening and getting the rest of us tax breaks like California Proposition 13 and Proposition 58, to transfer parents property taxes which should be low to begin with as it is in California due to 2% cap from Proposition 13… Plus Proposition 193, to transfer grandparents low fixed property taxes – then you know what? We’re going to start voting you do-nothing politicians out of office! Don’t forget, they’re supposed to be in there for our benefit, not theirs. And not for their super rich friends either. When did all this start getting confused and going wrong?

Posted by: Geoffrey Sadler | Jun 20, 2020 2:21:05 PM

Post a comment