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Distribution of Decedent's Living Trust Assets

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EileenMac

Junior Member
What is the name of your state? California

My friend and her sister are the beneficiaries of their mother's revocable living trust. The mother named the sister as sole trustee and, in an effort to be "fair", the unmarried, childless sister gets 65% of the assets, and my friend, who is a widow with 3 adult children and 4 grandchildren, gets 35%. Most assets have been liquidated in the past three years, except for the oil rights and the duplex in LA which has been an income property and is fully paid for, for many years. The trustee sister has been "managing" the property with tenants and distributing the income 65/35. Nothing else has been done. No tax filings, etc. The property was probably worth over $1 million in 2005. It was on the market for over 6 months, but no one even looked at it. Is the value of the house calculated on the price the mother paid for it, the value at the time of death, or the value now?

My friend is a widow with 3 adult children, and very little income and on Social security. Her sister is single, no children. The trustee sister has become emotionally unstable, both tenants have moved out, there is no income coming in, and now her sister has moved into one of the units, has no income other than a couple of hundred per month from the oil rights which was, until this month, being used to pay the insurance and taxes. Now she hasnt paid the electric, or the insurance and taxes, and claims she needs the oil income to "live on".

How long can a Living Trust remain undistributed after the death of the Trustor? Are there tax penalties or any other penalties for not distributing the assets in the past 3 years, especially the real property? Will the beneficiaries' have to pay estate taxes on the property if it is over a certain value? What are the eventual income and estate tax implications if the trust is not distributed until the sale of the property or until one of the beneficiaries dies? The property was probably worth over $1 million in 2005. It was on the market for over 6 months, but no one even looked at it. Is the value of the house calculated on the price the mother paid for it, the value at the time of death, or the value now? What happens with the property taxes when the property is transfered to the sisters?
 


seniorjudge

Senior Member
Q: How long can a Living Trust remain undistributed after the death of the Trustor?

A: All your answers are contained in the trust; search therein and learn.
 

anteater

Senior Member
Your friend's sister is digging a nice, big hole for herself. And it is almost inevitable that your friend will be dragged into it. And someone will make some nice money trying to fill the hole. Your friend needs to retain an attorney to get the sister replaced as successor trustee.

The trustee sister has been "managing" the property with tenants and distributing the income 65/35. Nothing else has been done. No tax filings, etc.
In other words, no tax return for the trust, no K-1's issued for the income and expenses, etc.??? Aaargh! :(:(:(

Is the value of the house calculated on the price the mother paid for it, the value at the time of death, or the value now?
The value for what purpose? For most purposes - estate valuation, beneficiary stepped up cost basis - it would be the fair market value on the date that mother passed away.
 

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