If you are currently a shareholder in a co-op and want to implement an asset protection strategy that involves transferring your shares and proprietary lease to a trust, you will need the co-op board’s approval. This is another good reason to retain an Elder Law firm experienced in addressing these matters. If the board says no, a knowledgeable attorney may still be able to persuade them to change their mind and allow you to move ahead with the plan.
There are several approaches we’ve found that have a track record of success with co-op boards:
- Explaining the Elder Law plan and why it is important to change the title to the apartment
- Proving ability to pay the co-op maintenance
- Agreeing to put money in an escrow account to cover a certain amount of maintenance
- Entering into an agreement that the trust will be responsible for the co-op’s collection expenses if there’s a problem regarding payment
- Making a commitment that any occupant of the apartment will be subject to the advance approval of the co-op board
- Agreeing that the apartment will be sold after the current occupant dies, or transferred only to someone approved by the co-op board.
The goal is to convince the board that the transaction doesn’t hurt the co-op, and can be consummated in a way that won’t expose the building to any additional risk. While no firm can guarantee getting board approval every time, Lamson & Cutner has been successful in almost every case.
Transferring a Co-op Apartment to a Trust
In NYC, Westchester, and the NY Metro Area, the process of placing co-op property into a trust includes the following steps:
- Create a trust agreement: You will need to create a trust agreement, and have it reviewed by the co-op’s attorney and approved by the Board before you can transfer your co-op into the trust. At Lamson & Cutner, we usually submit the completed trust agreement for approval before it is signed.
- Establish communications with the management company and co-op attorney: Confirm that the trust agreement complies with the co-op’s requirements for transferring the co-op shares and proprietary lease into the trust.
- Sign forms required by the co-op board: Depending on its rules, the co-op board may require you to sign Guarantees, Consents, or other documents.
- Close the transaction: Transferring co-op shares into a trust involves the issuance of a new share certificate and proprietary lease. At closing, your Trustee will sign the necessary paperwork.
- File Transfer Tax Return with NYC: For co-op shareholders in New York City, a transfer tax return is required, even though no tax will be due.
Trust Lamson & Cutner
Transferring property into a trust can seem complicated. Indeed, when co-op property is involved, there are many steps that need to be followed. However, the transfer can be a vital part of an asset protection strategy or estate plan. The Elder Law attorneys at Lamson & Cutner are skilled and experienced in transferring co-ops into trusts. We are committed to making the process as seamless and straightforward as possible for our clients.
To learn more or schedule a consultation, contact Lamson & Cutner today.