Canadian/US Real Estate Trusts
Many Canadians and other foreign nationals buy real property in the Palm Springs area, either as a vacation home or for investment purposes. In many cases, it makes sense to hold the real property in a trust. Sanger and Manes is a leader in establishing real estate trusts for that purpose.
For Canadians, the benefits of holding real property in a simple revocable trust are significant. A revocable trust can avoid a costly and time-consuming probate when the owner dies. It allows the owner to easily change beneficiaries with a simple trust amendment, rather than having to redraft and resign a Will in Canada. Post-death administration of the real estate, whether paying bills or filling property tax exemptions, is usually made easier. Revocable trusts are not appropriate for every non-US citizen in every situation, and some analysis is required to determine if any tax pitfalls exist. For instance, transferring real property to a US revocable trust could trigger capital gains for Canadians in their home country, if the property appreciated in value during the time the owners held title to it in their own names. But if done properly, under the right circumstances, particularly if the initial purchase is made by the trust, the benefits of Canadian/US Real Estate trusts can often be obtained without adverse tax consequences.
A revocable trust generally will not protect the owner from creditors or avoid or delay US estate taxes. Those benefits require more complex and sophisticated estate planning, including the establishment of an irrevocable cross-border trust, or using other entities to hold the property.
Sanger & Manes has an expertise in counseling foreign property owners on how to take title to real property, analyzing whether a real estate trust makes sense for them, drafting trusts to hold the property, and transferring the property to the trust. The Firm advises trustees on how to administer the property after the owner dies, from preparing the required forms to take the proper US estate-tax exclusions under tax treaties, to filing property tax change of ownership papers, to transferring the real estate to the intended beneficiaries. There is no law firm in the Palm Springs/Rancho Mirage/Palm Desert area with more experience in establishing and administering real estate trusts for non-US citizens than Sanger & Manes.
Sanger & Manes
Canadian/US Real Estate Trust Package
Sanger & Manes offers a fixed-fee package for Canadians who want to hold their California vacation home or rental unit in a revocable US trust. After a free initial consultation to determine whether a US revocable trust is appropriate, for the fixed fee, the Canadian/US Real Estate Trust Package includes:
- Assembling all the information and documents necessary to draft the trust, including determining the vesting status of the property.
- Drafting the trust, and the certificates of trust for use in the escrow handling the property purchase.
- Assisting the client in properly executing the trust and the certificates of trust, including providing a notary public, if the client is available to come to our offices.
- Working with escrow to make sure title vests properly for trust purposes when the escrow closes.
We can usually get the trust up and running within two weeks, faster if necessary to meet an escrow closing deadline. If the property is already owned by the client and not in an escrow for purchase, there is an additional fee to transfer and record current title to the trust, including the preparation and filing of the additional required assessor office forms. If the property is Indian lease land, a special agreement is required, since the Bureau of Indian Affairs, the agency that administers Indian real property allocations, has rigorous transfer procedures.
Contact us for details.