Laws, Regulations & Annotations

G

493.0000 GRANDPARENT-GRANDCHILD TRANSFER

Annotation 493.0140

493.0140 Trusts—Sprinkle/Spray. A Trust contains a sprinkle power that gives the Trustee total discretion to distribute trust property to a number of potential beneficiaries. The beneficiaries are the Settlor (H), the Settlor's spouse (W), and the granddaughter of W. In addition to the named beneficiaries, the Trustee is given authority to designate any members of a class of persons or any qualified charitable organization as beneficiaries. However, no additional beneficiaries had yet been named. Because a change in ownership requires a transfer of a present interest in real property and future interests in real property are not assessed, only the beneficiaries originally named by the Settlor are the present beneficiaries of the Trust. Therefore, the Trustee could potentially distribute all or a portion or none of the Property to H or to W or to Granddaughter.

When a trust contains a sprinkle power, all of the persons included as beneficiaries must be eligible for an exclusion. If even one person is not excludable, a change in ownership of all real property owned by the Trust will occur. Since there is no exclusion available if the Trustee distributes any portion of the Property to Granddaughter, a non excludable beneficiary (since the granddaughter�s parents were both living on the date the Property was transferred to the Trust), a change in ownership of the Property occurred at the time the Property was transferred to the Trust. C 6/12/2012.