Placing a Co-op in a Trust
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.Download our Estate Planning Handout
We’ve found several approaches 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.
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