Transfer of property to a living trust

Oran A. Hall, Gleaner Writer

QUESTION:

We are in the process of transferring our father's property into our names. There are four siblings. I would like to know the process and cost to transfer the property to a living trust.

- Carl

PFA: The transfer of property from one living person to another or to a trust is a useful estate-planning tool. This is a cost-effective tool, especially if your father's estate is considerable in value as it would, in essence, minimise the liability of duties payable on his estate on death.

I am assuming that your father is still alive and is thus making an inter vivos gift to his children. I am also assuming that you and your siblings are adults, that there is a registered title for the property, and that your father is fully satisfied in his mind that he wants to take this route.

Considering the complications which surface in these matters, I suggest that you at least consult with an attorney-at-law who is competent in these matters before proceeding with the transaction.

The first step in doing this inter vivos transfer is to get a valuation of the property. All duties and fees associated with such a transaction are determined on the value.

Your father would need to do a statutory declaration stating the description and value of the property. Alternatively, he could elect to appoint trustees to hold the property for your benefit and his for the duration of his life, but only he, as owner of the property, can make the gift or establish the inter vivos (living) trust.

He would also need to execute the transfer document transferring interest in the property to the trust or to the transferees - the beneficiaries - that is, you and your siblings.

Second, the document is to be lodged with the Stamp Duty and Transfer Tax Department of Tax Administration Jamaica so the assessable duties payable can be determined.

On assessment, the transfer tax of four per cent and stamp duty of J$30 should be paid within 14 days of the document being collected failing which a penalty of 100 per cent becomes applicable.

The normal stamp duty rate is three per cent of the value of the property, but the lower rate applies because this is a "love and affection" transfer. In other words, no consideration, or purchase money, has been given to effect such a transfer.

The attorney's fee will vary based on the attorney used and the complexities involved, but it is likely to be about three per cent of the value of the transaction, if such a service is being utilised.

There are, however, attorneys who may just charge a flat rate, but this will depend on the value and complexity of the transaction.

If, for instance, the title is lost, it would be necessary to do a lost title application. If the land is unregistered, it would be necessary to bring it under the Registration of Titles Act before it can be transferred, although both applications could be lodged simultaneously for expediency.

The next step is to take the title to the Titles Office of the National Land Agency to effect the transfer to the trust or living beneficiaries. This will cost 0.5 per cent of the value of the property.

If there are no problems, the title should be ready in three to seven business days.

If your father chooses the trust option and makes himself a beneficiary or a trustee of the living trust, he can still limit what control you and your siblings have over the property. You could only sell it with his approval.

Of course, he does not have to be a beneficiary. It is important to note that all beneficiaries can dissolve the trust at any time if they are adults and if there are no entailed interests.

Please ensure that the powers of the trustee or trustees are clearly outlined. No trustee can sell to himself or herself or derive a benefit from such an office because the trust principle is based on principles of equity.

Nonetheless, because all beneficiaries need not be trustees, it is conceivable that some could have more influence than others.

Bear in mind that the grantor, your father, can legally add to or remove assets from the trust if it is a revocable trust.

If handled properly, only the tax collector should lose in the arrangements you are putting in place.

Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of "The Handbook of Personal Financial Planning", offers free counsel and advice on personal financial planning. Email: finviser.jm@gmail.com.