Question about selling a house in a trust

[carester25]

What is the name of your state (only U.S. law)? Michigan

Here's my situation. My husband and his sister have their mother's house in a trust. She died in 2007. My sister is executor and sold the house without my husband's knowledge. She did not go through a realtor or the trust. The buyer wrote her a check for the sales price. They went and filled out a quit claim deed and it was recorded Mid-July. My MIL paid cash for the house in the 70's, so there was no mortgage. She then sent my husband a check for less than 1/3 of what she got. My worries are potential tax ramifications to us, since there is no paperwork involved here. I am just not sure what we should do.

 

[tranquility]

Ask for an accounting to see why that amount was paid.

It is unlikely you will have to pay tax on the money distributed beyond some minor amounts. The house probably got a step-up in basis in 2007. Heck, on the final return, you may have a loss on the sale.

 

[FlyingRon]

Trusts don't have executors.
Is she the trustee?
Did she quit claim with herself as the grantor or as the trustee of the trust.
In the former case, the quit claim conveys NOTHING.
You need to have a lawyer unravel this.

 

[HomeGuru]

What is the name of your state (only U.S. law)? Michigan

Here's my situation. My husband and his sister have their mother's house in a trust. She died in 2007. My sister is executor and sold the house without my husband's knowledge. She did not go through a realtor or the trust. The buyer wrote her a check for the sales price. They went and filled out a quit claim deed and it was recorded Mid-July. My MIL paid cash for the house in the 70's, so there was no mortgage. She then sent my husband a check for less than 1/3 of what she got. My worries are potential tax ramifications to us, since there is no paperwork involved here. I am just not sure what we should do.

**A: review the trust docs and see what it states. It could be possible that sister did not have to notify your husband of the sale. He needs to contact a CPA to discuss the tax issues.

 

[carester25]

Yes, she is the trustee, sorry. We were told by my realtor for our house that when it's sold in a trust, we'd get a check from the trust accompanied by the proper tax forms, if necessary. The buyer wrote her a check and she in turn sent less than 30% of that to my husband.

The only quit claim info i have is the name of the buyer and the sales price. We've received no paperwork. According to the county, the owner is still listed as the trust.

 

[HomeGuru]

Yes, she is the trustee, sorry. We were told by my realtor for our house that when it's sold in a trust, we'd get a check from the trust accompanied by the proper tax forms, if necessary. The buyer wrote her a check and she in turn sent less than 30% of that to my husband.

The only quit claim info i have is the name of the buyer and the sales price. We've received no paperwork. According to the county, the owner is still listed as the trust.

**A: sounds like a mess. Was there a closing agent, escrow etc? Generally a Buyer does not pay the trustee personally and directly.

 

[carester25]

He wrote a check to my sister-in-law personally. She then, in turn, wired money into our account. To my knowledge, there were no agents to avoid fees.

 

[HomeGuru]

He wrote a check to my sister-in-law personally. She then, in turn, wired money into our account. To my knowledge, there were no agents to avoid fees.

**A: not good.

 

[tranquility]

He wrote a check to my sister-in-law personally. She then, in turn, wired money into our account. To my knowledge, there were no agents to avoid fees.

The first step is to get an accounting for the money. Then you can explore the possible breaches of fiduciary duties. From the above quote, I'm thinking there are at least two breaches in the actions taken.

(That is without considering if the trust needed money or if the sale benefited one beneficiary over the other.)

 

[carester25]

We're in the process of trying to get a copy of the accounting. His sister took 73% and gave my husband 27%. It is just him and his sister. My guess is that the rest of his half is already spent. This is such a fiasco.

 

[tranquility]

Then, have husband get an attorney. There seems at least two probable breaches here. Not getting proper advice and mingling funds. Sister should not have taken in the money to her own account.

 

[HomeGuru]

Then, have husband get an attorney. There seems at least two probable breaches here. Not getting proper advice and mingling funds. Sister should not have taken in the money to her own account.

**A: there may be more issues than the two. In fact, I am pretty sure that there are more when there is full discovery.

 

[carester25]

Thank you for the information. I'll definitely have to look into getting a lawyer to sort this out.

 

[tranquility]

I agree there may be more than two, but any breach is actionable, so I just listed the ones more probable based on our facts.

 

[LdiJ]

I agree there may be more than two, but any breach is actionable, so I just listed the ones more probable based on our facts.

I think he should at least ask his sister to explain things before he hires an attorney. There is a chance that there is a reasonable explanation. Maybe a slim one, but a chance.