Virgin Islands Attorney General Vincent Frazer issued an opinion to Lieutenant Govenor Greg Francis on May 17, 2003 relative to the status of tax exemptions on real property transfers in the Territory. The specific question posed by Lt. Governor Francis was whetther a conveyance of real property to or from a trust for the benefit of a grantor or beneficiary of a trust (reltated to the grantor withing the degrees of consanguinity statutorily set forth in Title 33, Section 128, subsection (a), item 8, Virgin Islands Code, is exempt from the payment of the Virgin Islands documentary stamp taxes.
Attorney General Frazer noted in his opinion that "[a]pparently it has bee the past practice of the Recorder of Deeds to exempt transactions involving trusts, or certain trusts (such as those referred to as "family trusts"), from the payment of stamp taxes. The Virgin Islands Code does not specifically reference "family trusts", but such trusts are generally deemed to be a form of an express trust, revocable in nature, referred to as an inter vivos or living trust."
Frazer reasoned that as the Virgin Islands Code does not provide for an exemption for family trusts from the payment of stamp taxes pursuant to statute and that as the parties to the real estate transaction have interposed an entity between themselves and the land, that such transfer were not exempt. The Attorney General also noted in his opinion that the Recorder of Deeds was without authority to waive the payment of stamp taxes and moreover is under a duty to "sell and collect stamp taxes in the interest of the public."
Members of the Virgin Islands Territorial Association of REALTORS (VITAR) and various real estate attorneys in the Territory expressed displeasure with the Attorney General’s opinion and noted that with Virgin Islands probate law being so inefficient and onerous that this action would only serve to inhibit use of family trusts to avoid probate in the Territory.
Tom Bolt, Managing Attorney of BoltNagi PC in St. Thomas, Virgin Islands and Chair of the Virgin Islands Uniform Law Commission, stated that the local Commission is working with members of the 30th Legislature of the Virgin Islands, to amend the probate code. Bolt who has served as General Counsel for VITAR and as President of the Virgin Islands Bar Association noted that the best alternative for Virign Islanders with regard to the Attorney General’s opinion would be through legislation. "I would hope that we can secure the approval of a majority of the current Legislature and Governor deJongh to amend the Code to conform with the prior longstanding policy of the Office of the Recorder of Deeds." Bolt said.
BoltNagi PC is a full service firm located in St. Thomas, Virgin Islands with an active Real Estate and Financial Services and Corporate, Tax and Estate Planning Practice Group. If you have any questions regarding real estate or estate planning, please don’t hesitate to contact BoltNagi PC today.