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.

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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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

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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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