Volume 9 - Opinions of Counsel SBEA No. 52
Assessment roll (designation of owner) (life estate) (trust) - Real Property Tax Law, § 502:
Where an owner of real property has placed the property in trust but has reserved a life estate in the property, that person remains the owner of the property for purposes of real property tax administration.
An individual who has been the owner of real property which has been receiving the senior citizens exemption (RPTL, §467) has established a trust and has executed a deed conveying the title to the property to the trustees of the trust. The grantor-settlor is not a trustee of the trust, but in the deed conveying title to the trust, she has reserved a life estate in the property. We have been asked whether she may continue to be considered the owner of the property under these circumstances.
We have stated that if a person holds a life estate in real property, he or she must be considered the legal owner of the property, both for purposes of the designation of the owner on the assessment roll (RPTL, §502) and for purposes of exemption administration (see, e.g., RPTL, §§458, 458-a), as long as the life estate is in effect (1 Op.Counsel SBEA Nos. 34,59, 88; 3 id. No. 45; 4 id. No. 57; 5 id. No. 12; 9 id. No. 41; see also, 1968 Op.Atty.Gen. 40). However, we have also stated that when property has been conveyed to a trust, the trustee must be considered the owner of the property (Estates, Powers and Trusts Law (EPTL), §7-2. l(a); 3 Op.Counsel SBEA No. 91; 4 id. No. 96). Thus, it might appear that these Opinions are in conflict when a grantor has reserved a life estate in property while conveying the property to a trust. Upon closer examination, however, it becomes clear that these Opinions are in fact quite consistent with one another.
By reserving a life estate, a grantor-settlor effectively conveys to the trust only the remainder, i.e., the future estate that will become a possessory estate upon his or her death (EPTL, §§6-4.1 - 6-4.3). It has been repeatedly recognized that a settlor may reserve or create a life estate in the corpus of a trust (see, e.g., In re Brewsters’ Estate, 246 A.D. 192, 283 N.Y.S. 707 (3d Dept. 1935), aff’d sub nom. Matter of Wells, 271 N.Y. 599, 3 N.E.2d 204 (1936); In re Estate of Hillowitz, 22 N.Y.2d 107, 238 N.E.2d 723, 291 N.Y.S.2d 325 (1968); Corse v. Chapman, 153 N.Y. 466, 47 N.E. 812 (1897); Bailey v. Bailey, 97 N.Y. 460 (1884)). In such a case, the life tenant must be considered the owner of the property for purposes of real property tax administration as long as the life estate is in effect. The trustee should be treated like any other remainderman, i.e., the trustee should not be deemed the owner until the termination of the life estate to which the interests are subject (see, 4 Op.Counsel SBEA No. 57).
Therefore, if the grantor-settlor has indeed reserved a life estate in the premises, she should be considered the owner of the property and may continue to receive the senior citizens exemption if the eligibility requirements are otherwise satisfied.
January 22, 1992
NOTE: Construes law prior to L.1995, Chapters 377 and 378; see also Opinion 10-25.