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Loeb & Loeb Private Client senior counsel John Pelet is quoted in a The Wall Street Journal article exploring New York City’s newly enacted pied-à-terre tax and the estate planning implications it presents for families holding residential real estate through trusts.
In the article, John discussed how the tax could apply to residences held in irrevocable trusts, even when a beneficiary occupies the property as a primary residence, and outlined potential planning strategies for affected families.
“Property owned by an irrevocable trust—a structure used to move property outside of an individual’s taxable estate—could be subject to the tax even if
one of its beneficiaries lives there full time,” John said. “Say the home is in an irrevocable trust with three beneficiaries, including a parent and two adult children. If one of the children lives in the house, the trust would be subject to the pied-à-terre tax.”
John also highlighted trust decanting, a planning technique he has advised clients to consider, which involves transferring property to a new trust for the primary resident's benefit. He further noted that a primary resident could lease the property from the trust, while cautioning that the resulting income tax liability and other complexities may, in some cases, outweigh the benefits.
To read the full article, please visit The Wall Street Journal’s website (subscription may be required).
In the article, John discussed how the tax could apply to residences held in irrevocable trusts, even when a beneficiary occupies the property as a primary residence, and outlined potential planning strategies for affected families.
“Property owned by an irrevocable trust—a structure used to move property outside of an individual’s taxable estate—could be subject to the tax even if
one of its beneficiaries lives there full time,” John said. “Say the home is in an irrevocable trust with three beneficiaries, including a parent and two adult children. If one of the children lives in the house, the trust would be subject to the pied-à-terre tax.”
John also highlighted trust decanting, a planning technique he has advised clients to consider, which involves transferring property to a new trust for the primary resident's benefit. He further noted that a primary resident could lease the property from the trust, while cautioning that the resulting income tax liability and other complexities may, in some cases, outweigh the benefits.
To read the full article, please visit The Wall Street Journal’s website (subscription may be required).
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Senior Counsel