Ownership of a Sun City property by a trust is different from individual ownership and RCSC Bylaws and Board Policies (commonly referred to as the “Corporate Documents”) address trust ownership. Trusts are structured with beneficial interests, of which the Corporate Documents address the following two categories:
1. If a Sun City property is in a trust, who is eligible for Member cards and to vote?
No more than two of the Grantors / Trustors / Settlors of the Trust may be deemed to be Members, provided that they meet the individual Member qualifications: Must be 55 years of age or older (unless qualified under the spousal exemption) and occupy the Property as his/her primary Arizona residence unless his/her other Arizona residence is farther than seventy-five (75) miles from Sun City.
2. Is a Preservation and Improvement Fee (“PIF”) or a Transfer Fee assessed if a property is placed into a trust?
No, provided that the Owner(s) of the Property are the original payor(s) of a PIF and Transfer Fee and retain a majority ownership interest in the Property as the Grantors / Trustors / Settlors of the Trust.
3. Does the annual property assessment basis change as a result of placing a property into a trust?
No, provided that the current Owner(s) of the Property retain their ownership interest in the Property as the Grantors / Trustors / Settlors of the Trust.
4. What if a property purchased prior to February 1, 2003, which is being assessed on a per person basis, is placed into a trust?
The Property will continue to be assessed on a per person basis as long as: (a) Owner(s) consistently maintain the Property as their primary Arizona residence as defined in the Corporate Bylaws; (b) Owner(s) are in compliance with the Restated Articles of Incorporation, Corporate Bylaws, Board Policies and any Rules and Regulations of the Corporation; and (c) original Owner(s) as of February 1, 2003 remain as majority Owner(s) Grantors / Trustors / Settlors of the Trust which owns the Property.
5. If a Sun City property, held in a trust, is on a per person assessment basis how exactly is it assessed?
If a trust holds or owns the Property, then the Owner(s) shall be no more than two of the Grantors / Trustors / Settlors of the Trust. Remainder, contingent or non-vested beneficiaries of a trust are not considered Owners.
6. What happens if the Grantors / Trustors / Settlors (original payors of the PIF and Transfer Fee)of the Trust are deceased and the Property remains in the Trust?
Although the Trust holds title to the Property, the Owners of the Property (as defined in the Corporate Bylaws) changed upon the death of the last original Grantor / Trustor / Settlor of the Trust. Therefore, a PIF and Transfer Fee will be assessed against the property as a result of their death regardless that the Property remains titled under the Trust or if a lifetime use of the Property is granted. If the Property is being assessed on a per person basis, the basis will change to a per property basis on the date of death of the last original Grantor / Trustor / Settlor.
7. What if the remainder or contingent beneficiaries want to place the property into a separate trust?
This represents a change in ownership and both PIF and Transfer Fees would be assessed against the Property, unless the PIF was paid at the time of the death of the last original Grantor / Trustor / Settlor of the Trust and the payor(s) retains a majority ownership interest in the Property. If the Property was previously being assessed on a per person basis, the basis will change to a per property basis on the date of change in title.
8. What happens when the Trust distributes ownership of the Property to the remainder or contingent beneficiaries?
This represents a change in ownership and both PIF and Transfer Fees would be assessed against the Property, unless the PIF was paid at the time of the death of the last original Grantor / Trustor / Settlor of the Trust and the payor(s) retains a majority ownership interest in the Property. If the Property was previously being assessed on a per person basis, the basis would change to a per property basis on the date of change in title.
9. What happens if the remainder or contingent beneficiaries just want to sell the Property, do they still have to pay the PIF and Transfer Fees?
Yes, but the Preservation & Improvement Fee may be reimbursed to an heir, if the property is sold to another owner within one year of the inheritance, and the related property/special assessments and fees are current. The date of inheritance is the date of death of the last original Grantor / Trustor / Settlor of the Trust. An application for a refund must be made within one hundred eight (180) days from the closing date of escrow for the Property.
10. Do the remainder or contingent beneficiaries need to take title to the Property outside of the Trust in order to sell the Property?
This question is best answered by legal counsel and/or real estate and financial advisors. RCSC cannot provide such advice. The above questions and answers should address what will occur regardless of what a remainder or contingent beneficiary decides to do regarding a Sun City property held in a trust.
11. What happens with a spouse that is not a Grantor / Trustor / Settlor of the Trust?
A spouse who is not an Grantor / Trustor / Settlor of a trust is eligible for Privilege Card for an additional fee. As a non-owner of a Sun City property, such a spouse cannot receive a RCSC Member card.
12. What happens if a spouse is not a Grantor / Trustor / Settlor of the Trust but is granted lifetime use of the property?
A spouse who is not a Grantor / Trustor / Settlor of a trust is eligible for Privilege Card for an additional fee. Although the Trust grants the spouse lifetime use, the spouse is a non-owner of a Sun City property and cannot receive a RCSC Member card.
