Legal Question in Real Estate Law in Massachusetts

Without reviewing the trust it is impossible to be accurate. Assuming the trust is a testamentary trust and not a Mass. Business Trust or a more exotic form of trust used for estate purposes, then the beneficiaries should be deed the properties as tenants in common and the cash which has been retained and subjected to income taxation will be disbursed tax free. The income earned in a current tax year and not yet taxed will be treated as taxable income to the extent there are no deductions for operating expenses and depreciation.

The Beneficiaries will inherit the properties at the depreciated basis as held by the Trust. For example if the Trust had an original basis of $100,000 and over the years have taken depreciation of $40,000, then the beneficiaries would have a combined basis of in the properties of $60,000. It is important to know how the depreciation was calculated prior to distribution as this could have tax ramifactions when the properties are sold.

Remember without actually reading the Trust and reviewing past tax returns it is impossible to know exactly what the tax ramifications will be when the assets of the trust are distributed.

As to you and the other beneficiaries agreesing to form a LLC to hold the properties, that can be done with the agreement of all parties.

Please feel free to contact me if you have more questions.