Volume 3 - Opinions of Counsel SBEA No. 91
Veterans’ exemption (member of exempt class) (beneficiary of trust) - Real Property Tax Law, § 458:
A veteran having only the equitable interest of a beneficiary of a trust in real property is not entitled to an exemption pursuant to section 458 (veterans’ exemption) because he does not satisfy the ownership requirement therein.
Our opinion has been requested as to the status of the veterans’ exemption where the veteran’s relationship to the real property is as a beneficiary of a trust, the corpus of which includes the property.
More specifically, a veteran and his wife own a presently exempted parcel as tenants by the entirety. For estate planning purposes, their attorney has proposed that title be placed solely in the wife’s name. If the wife should predecease her husband, under the terms of her will, the property will pass into a testamentary trust of which the husband would be the sole beneficiary during the term of his life. At his death, their daughter and the daughter’s children would become the beneficiaries.
As we have previously stated (1 Op.Counsel SBEA No. 88), in order to qualify for exemption pursuant to section 458 of the Real Property Tax Law, the applicant must be the owner of the subject property. However, this statute does not require that there be an ownership in fee, nor does it otherwise qualify the nature of ownership by one of the persons enumerated therein.
For example, the law is well settled that a life tenant of real property has a freehold estate and is considered the owner thereof for assessment purposes (Deraismes v. Deraismes, 72 N.Y. 154). Thus, a person who has a life estate would be considered the owner of the property within the meaning of section 458. While a purchaser in possession under an executory contract of sale (title being retained in the seller notwithstanding) is deemed to be the owner for taxation purposes (People ex rel. Donner-Union Coke Corp. v. Burke, 204 App.Div. 557, 198 N.Y.S. 601, aff’d, 236 N.Y. 650, 142 N.E. 320), it has been held that a seller in possession under an executory contract of sale is deemed to be the owner for purposes of real property taxation (Kissick v. Rees, 111 App.Div. 292, 97 N.Y.S. 692).
It has also been held that a person who is deemed to be the owner of real property for taxation purposes is deemed to be the owner for exemption purposes (1 Op.State Compt. 249; 4 Op. State Compt. 140).
Pursuant to subdivision (a) of section 7-2.1 of the Estates, Powers and Trusts Law, an express trust vests in the trustee the legal estate, subject only to the execution of the trust, and the beneficiary does not take any legal estate in the property although he may enforce the trust. Pursuant to subdivision (b) (5) (B) of section 11-1.1 of the Estates, Powers and Trusts Law, in the absence of contrary or limiting provisions in the will, the trustee of a testamentary trust has the power to sell property. As stated above, legal title to the corpus of a trust is in the trustee, and real property in a corpus is taxable to the trustee (People ex rel. Van Norden Trust Co. v. Wells, 118 App.Div. 881, 103 N.Y.S. 874, aff’d, 192 N.Y. 552, 85 N.E. 1114).
It has been held that property is subject to taxation while held by a trustee although the equitable owner is a person entitled to an exemption (People ex rel. National Commercial Bank & Trust Co. v. Lewis, 179 Misc. 140, 39 N.Y.S.2d 64).
Based on the foregoing, it is our opinion that a veteran having only the equitable interest of a beneficiary of a trust in real property is not entitled to an exemption pursuant to section 458 of the Real Property Tax Law.
March 5, 1974
NOTE: Construes law prior to L.1995, c.377.