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Here's an interesting case. In 1996 Bob plans to put his 1010 Fifth co-op into a Qualified Personal Residence Trust. That'd put the apartment out of his estate, and he'd pay gift tax on the 1996 value less the present value of his right to live there for 15 years. In 2011 he'd have to start paying market rent to the trust (i.e., his son Zach.)
Problem was, come 2011, they're fighting, and son Zach sues Bob to vacate the apartment so he can sell it and walk off with proceeds, instead of whatever friendly arrangement Bob had figured on in 1996.
Turns out, the 1996 gift to the trust was never recorded on the books of the co-op, so the trust never owned it, and Zach is SOL with nothing.
Here's the judge's no-completed-gift decision: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=jN4wDEJqMNi99kDnbBfAEA==&system=prod
To get the full flavor, here's some colloquy between the lawyers and judge: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=4BrN3/KdpLtbHsMT7HIxrg==&system=prod
Looks like a bad misstep by Zach. Now he doesn't have the apartment for having tried to kick dad out onto the street will probably be written out of the will forever as well.
The Court: "It's a free country. You can do it or not do it."
"The Court: "Hold the phone..."
"Your Honor...just ignore all the facts..."
"The Court: "Hang on, the light bulb is going off over my head."
Well it was actually gifted to the daughter and Zach is the trustee
Of course there usually is more than than meets the eyes in these type stories but Zach does look like a douce.
No, the intended gift was to the trust. The daughter was the first trustee, replaced by Zach "as per the terms of the trust."
We don't know who the beneficiaries would've been, since the trust agreement wasn't e-filed. Even had it been, the beneficiaries are often specified in a separate schedule that can be changed without reforming the trust itself.
What Bob's lawyer said in court, though, suggests that Zach was the beneficiary in 2011. ACRIS shows gifts of other apartments to the daughter and the other son, so my best guess is that Zach as trustee sued Bob on behalf of himself alone.
NWT: that's correct.
Zach is an ungrateful son.