The District of Columbia Court of Appeals ruled on May 14, 2026, that Milton A. Barlow, Jr. is not entitled to a tax refund for transfer and recordation taxes he paid when he received property from a trust. This decision affects Barlow and other beneficiaries of trusts who may seek similar tax exemptions in the future.

The case, Barlow, Jr. v. District of Columbia (No. 24-TX-0500), arose after Barlow claimed his deed was exempt from these taxes under D.C. law. The court's ruling clarifies the legal interpretation of tax exemptions related to property transfers and could impact how trust beneficiaries handle property transactions in the District.

Background

Milton A. Barlow, Jr. was the primary beneficiary of a trust established by his father. The Austin Trust Company (ATC) acted as the trustee and purchased a residential property in Washington, D.C., on behalf of the trust in 2007. The trust paid transfer and recordation taxes at that time. In 2021, when the trust was dissolved, ATC deeded the property to Barlow without any payment. Barlow subsequently paid over $53,000 in taxes related to the transfer and sought a refund, arguing that his deed was exempt under District law.

The Office of Tax and Revenue (OTR) denied Barlow's claim for a refund, stating that his deed did not qualify for the exemptions he cited. Barlow then petitioned the Superior Court to review the denial, but the court granted summary judgment in favor of the District, leading to Barlow's appeal.

The Ruling

The court ruled against Barlow, affirming the trial court's decision. The judges stated that "the trust was legally distinct and separate from Mr. Barlow" and that "under District of Columbia law, recordation and transfer taxes are imposed on each change in the legal entity owning real property." This ruling means that Barlow's deed did not qualify for the tax exemptions he sought.

Associate Judge Beckwith, along with Judges Deahl and Washington, emphasized that the transfer of property from the trust to Barlow constituted a complete change in legal ownership, thus making the transaction subject to taxation. The court noted that the statutory exemptions for supplemental deeds did not apply in this case.

Impact

This ruling has significant implications for beneficiaries of trusts in the District of Columbia. It clarifies that property transfers from trusts to beneficiaries are not automatically exempt from transfer and recordation taxes. Beneficiaries must be aware that the legal distinctions between entities, such as trusts and individuals, can result in tax liabilities that cannot be avoided simply by structuring transactions to minimize taxes.

The decision also reinforces the principle that tax exemptions must be explicitly stated in the law, and the court cannot create exemptions that the legislature has not provided. This ruling may lead beneficiaries to reconsider how they manage property within trusts and the potential tax consequences of those actions.

What's Next

Barlow's case cannot be appealed further within the District of Columbia Court of Appeals. However, there may be related cases in the future as other trust beneficiaries navigate similar tax issues. The ruling may prompt discussions among lawmakers regarding potential changes to tax laws affecting trusts and their beneficiaries.