REAL ESTATE EXCISE TAX ‑- GRANT TO FRATERNAL ORGANIZATION OF PROPERTY IN TRUST FOR GRANTOR, FOLLOWED BY A SUBSEQUENT SALE TO THIRD PARTY ‑- APPLICABILITY OF TAX

REAL ESTATE EXCISE TAX ‑- GRANT TO FRATERNAL ORGANIZATION OF PROPERTY IN TRUST FOR GRANTOR, FOLLOWED BY A SUBSEQUENT SALE TO THIRD PARTY ‑- APPLICABILITY OF TAX

The real estate excise tax is applicable to both a conveyance to a trustee and a subsequent conveyance by the trustee to a new purchaser.

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                                                                October 15, 1956

Honorable D. L. McMannis
Prosecuting Attorney of Whitman County
116 Spring Street
Colfax, Washington                                                                                            Cite as:  AGO 55-57 No. 328

Dear Sir:

            In your letter of September 10, 1956, previously acknowledged, you requested an opinion from this office as to the taxability under the real estate excise tax laws of the following transaction:

            "Grantor, an elderly woman, desires to convey to a fraternal organization her property, to be held in trust by such fraternal organization for her use and benefit.  The trust provisions provided that on transfer of such property to the fraternal organization, they will immediately cause same to be sold, the proceeds of such sale to be used in the care, comfort and support of said elderly woman.  The trust agreement further provides that in the event the woman dies prior to the time all funds received in consideration of the sale of her property are expended, such unexpended funds will revert to the heirs of the decedent."

            You then ask the following questions:

            "1. Is the real estate excise tax applicable to the transaction wherein the elderly lady conveys to the trustee, and if so, the consideration upon which the tax shall be paid and the method of computation thereof.

             [[Orig. Op. Page 2]]

            "2. Is the tax due of the second transaction wherein the trustee will convey out to a new purchaser."

            We answer your questions 1 and 2 in the affirmative.  The consideration is determined by the county commissioners.

                                                                     ANALYSIS

            In our view the provisions of chapter 28.48 RCW are applicable to the transfer from the grantor to the trustee and likewise the tax imposed thereunder applies to the transfer from the trustee to third persons.  The consideration upon which the tax shall apply on the transfer from the grantor to the trustee shall be determined by reference to the ordinance passed by the county commissioners under the provisions of RCW 28.45.035.

            The excise tax on real estate transfers defines the term "sale" in RCW 28.45.010 (1955 Supp.) to:

            ". . . include any conveyance, grant, assignment, quitclaim, or transfer of the ownership of or title to real property, including standing timber, or any estate or interest therein for a valuable consideration, . . ."

            The above statute further sets forth specific circumstances and transactions which are not included within the definition of the word "sale."  A reading of this paragraph makes it clear that there is nothing within the provisions thereof which would exclude a transfer to a trustee as outlined in the facts involved herein.

            Thus, although no express consideration is described for the transfer from the grantor to the trustee, it is apparent that valuable consideration for the transfer in fact exists.  In such cases the provisions of RCW 28.45.035 provide that the board of county commissioners shall provide by ordinance the means for determining a selling price where one is not stated or is not ascertainable.  Accordingly, it is our conclusion that in the absence of any provisions in the definition of the term "sale" as provided in RCW 28.45.010 (1955 Supp.), excluding a transfer to a trustee under the circumstances described herein, that such a transfer constitutes a "sale" within the definition above.

            Our discussion above necessarily answers your second question and thus our conclusion is the same.

             [[Orig. Op. Page 3]]

            We recognize that our conclusions have the effect of imposing the same tax twice on what may be intended to be a single transaction designed to provide for the care and maintenance of the grantor.  We further recognize that it is consistent with public policy to encourage means by which elderly persons may provide for their own care and support.  But the fact that a person has employed two conveyances to effect a result which might have been achieved by one conveyance, cannot alter the fact that two taxable transactions occurred.

Very truly yours,

DON EASTVOLD
Attorney General

ROBERT L. SIMPSON
Assistant Attorney General