(a)
Transfers to ordinary trusts. A transfer of real estate for no
or nominal consideration to an ordinary trust is fully taxable unless the
transfer of the same real estate would be wholly excluded if the transfer was
made directly from the grantor to all of the possible beneficiaries who have a
remainder interest or who are otherwise entitled to receive the real estate or
the proceeds from the sale of the real estate as a beneficiary under the terms
of the trust, whether or not the beneficiaries are contingent or specifically
named.
Example: G transfers real estate to a
trust without consideration for the use of B, G's spouse, for life. Under the
trust, the remainder interest is vested in G's church. As a direct transfer to
the religious organization would be taxable, the transfer to the trust is fully
taxable.
(b)
Contingent beneficiaries. A trust provision which identifies a
contingent beneficiary by reference to the heirs of the trust settlor as
determined by the laws of intestate succession will by itself neither qualify
nor disqualify a transfer from the exemption provided by subsection
(a).
(c)
Transfers to
living trusts.
(1) A transfer for no
or nominal actual consideration to a trustee of a living trust from the settlor
of the living trust is excluded from tax.
(2) A transfer for no or nominal actual
consideration to a trustee of a living trust from a grantor other than the
settlor is fully taxable unless the transfer of the real estate would be wholly
excluded if the transfer was made directly from the grantor to the
settlor.
(d)
Transfers from ordinary trusts. A transfer from an ordinary
trust is fully taxable except for a transfer for no or nominal actual
consideration from the trustee to the person who has the vested remainder
interest or who is otherwise entitled to receive the real estate or the
proceeds from the sale of the real estate as a beneficiary under the terms of
the trust.
(e)
Inter vivos
transfers from living trusts.
(1) A
transfer from the trustee of a living trust during the settlor's lifetime to a
grantee other than the settlor will be treated as if the transfer were made
directly from the settlor to the grantee.
(2) A transfer from the trustee of a living
trust to its settlor is excluded from tax, irrespective of who conveyed the
real estate to the trustee. However, if the grantor who conveyed the real
estate to the trustee is the settlor's family member as defined in §
91.193(b)(6)
(relating to excluded transactions), the provisions of §
91.193(b)(6)(ii)
apply to a subsequent transfer.
(f)
Transfers from testamentary
trusts and living trusts after the death of the settlor. A transfer of
real estate from the trustee of a testamentary trust or a living trust after
the death of its settlor is exempt from tax only if the transfer is made for no
or nominal actual consideration and to the person who, under the governing
instrument of the trust, has the vested remainder interest or who is otherwise
entitled to receive the real estate or the proceeds from the sale of the real
estate as a beneficiary under the terms of the trust.
(g)
Requirement for
exemption. An exemption will not be granted under this section unless
the recorder of deeds is presented with a copy of the trust
agreement.
