Attorneys and property managers have been inundated with requests to transfer apartments to trusts before the new year, when some co-op owners will face a series of tax changes triggered by the fiscal cliff, the New York Observer reported.
If Congress fails to reach an alternative budget deal, beginning on Jan. 1, homeowners will no longer be able to take advantage of the $5.1 million gift tax exemption. They will also face an inheritance tax of 55 percent, a jump from its current level of 35 percent.
“We’ve never seen this many transfers taking place that must be by year-end,” Eva Talel, a real estate lawyer at Stroock & Stroock & Lavan, told the Observer. “For people who want to transfer, there’s a very big financial consequence if it happens, and there’s a lot of pressure on managing agents to make it happen.”
But the process to transfer a co-op or condo to a trust is fraught with potholes, experts say.
“For decades it’s been an estate-planning device, but it doesn’t happen at the snap of fingers,” said Mary Ann Rothman, the executive director of the Council of New York Cooperatives and Condominiums.
Trust transfers can be time-consuming and are subject to the approval of co-op boards which are often reluctant to relinquish control, Rothman said. [NYO] — Hiten Samtani