Co trustee unwilling to divide property

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

I am one of two co trustees in an irrevocable trust. We are to dissolve the trust and distribute the property (a house) among 4 beneficiaries (I am one of the beneficiaries) upon the death of our mother. It has been several years since her death. Immediately upon her death I told the other beneficiaries that I want to sell the property and have been asking them to make a decision, to no avail. The other co trustee refuses to sign a listing agreement to sell the property. None of the beneficiaries is willing to buy me out at a fair price based on a recent appraisal. Now they tell me it's not a good time to sell. I live in NJ and can't even keep an eye on the property, which is in NY. I'm concerned about waiting any longer and I need the money from my share.
What can I do to fulfill my fiduciary duty and to obtain my share as beneficiary?What is the name of your state (only U.S. law)?

It is clear that what you feel your fiduciary duty is in conflict with what you want as a beneficiary. I suggest that if you cannot seperate what would be to your benefit as to what would be to the benefit of the beneficiaries you need to step away from the table.

Distribute the property and then work things out.

tranquility said:

It is clear that what you feel your fiduciary duty is in conflict with what you want as a beneficiary. I suggest that if you cannot seperate what would be to your benefit as to what would be to the benefit of the beneficiaries you need to step away from the table.

Distribute the property and then work things out.

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**A: it appears that a partition action is in order.

How to distribute the property

Thanks for your response.
I want to distribute the property and work things out, as you suggest. How can I do that without the other co-trustees cooperation, and without the legal fees coming out of my pocket?

(I had hoped to remove myself from the table by accepting their offer to buy me out, but they withdrew the offer and now are not willing to sell or buy me out.

Do a GOOGLE search and talk to a lawyer about what partition means.

Yes. Read all about it. It will cost $$$.

Deeds can have lots of names on them.

Partition action / court order to force sale

The deed is in the name of the two co-trustees of the trust.
As suggested, I looked into a partition action. The property is a one family house that requires too much money to make livable, and could not be divided among four of us, which raises additional questions...
--Is there any other way for me to get my share of the value of the property without seeking a court order/forced sale? I want my share and to get out, and then I want to remove myself as co-trustee so the others can proceed as they wish. I don’t trust their judgment.
--Since the other co-trustee is stone-walling, can the legal expenses to distribute my share come out of the fiduciary responsibilities I have as co-trustee, or do I have to pay the legal expenses to get my share?
--Do I need the co-trustee to sign a listing agreement to sell the property, or can one trustee sign without the other?
--How does a court order/forced sale work? Does the court decide how it’s to be sold (sign a listing agreement, auction, buyout?)
--Do the co-trustees lose control over how the property is sold?
--If it’s thru a broker, who decides what broker is used?
--How is it decided how long it can be marketed/listed before sale?
--I have been warned that in a forced sale, we would lose out because it is sold at a distressed sale price below market value. Could my siblings then buy it at the distressed sale price? To avoid selling to them at below it’s value, which is what they are attempting, could I counter offer to buy them out? How would it be decided in that case?
Thank you for your help.

--Is there any other way for me to get my share of the value of the property without seeking a court order/forced sale? I want my share and to get out, and then I want to remove myself as co-trustee so the others can proceed as they wish. I don’t trust their judgment.

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Either the trustees sell the property if they feel the sale is in accord with their fiduciary duties and at their discretion, or the property is distributed to the beneficiaries and a partition suit then takes place. Some states allow a partition action before distribution, but I am uncertain on that point. So, no. What you want is irrelevant.

--Since the other co-trustee is stone-walling, can the legal expenses to distribute my share come out of the fiduciary responsibilities I have as co-trustee, or do I have to pay the legal expenses to get my share?

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If the other trustee is in breach of his fiduciary duties you can try to have him removed as a co-trustee. NOTHING you have said even approaches such a breach. In fact, your insistence seems more of a breach as it puts your interests in front of the other beneficiaries. So, no. The legal expenses come from your pocket, unless you win, and then the co-trustee may have to pay.

--Do I need the co-trustee to sign a listing agreement to sell the property, or can one trustee sign without the other?

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It depends on what the trust says. However, seek legal council even if you have the power under the trust. I again state, I feel you may very well be in breach of your fiduciary duties with your desire to put your needs over the needs of the other beneficiaries.

--How does a court order/forced sale work? Does the court decide how it’s to be sold (sign a listing agreement, auction, buyout?)

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Study up on it. You have years to figure it out.

--Do the co-trustees lose control over how the property is sold?

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If the partition sale is approved, the court is now in charge. Again, write in a year or two.

--If it’s thru a broker, who decides what broker is used?
--How is it decided how long it can be marketed/listed before sale?

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It's not listed. It's sold at a courthouse auction. No broker will be needed.

--I have been warned that in a forced sale, we would lose out because it is sold at a distressed sale price below market value. Could my siblings then buy it at the distressed sale price? To avoid selling to them at below it’s value, which is what they are attempting, could I counter offer to buy them out? How would it be decided in that case?

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No more thinking is involved. No more decisions. You can both try to out bid each other at the auction in the summer of 2010.

Co-trustee sees no alternative to holding on while property declines in value

Thank you...your responses are each very very helpful.

I have met with two attorneys over the past couple of years (paid out of my pocket). They advised against seeking a forced sale since it is the way all beneficiaries end up losing. They also advised that seeking legal removal of the co-trustee would be so costly it would not be worthwhile, considering the value of the property.

However, neither suggested that my seeking to resolve the issue could be a breach of my fiduciary duties. In fact, the opposite. I was advised that by not acting, I could be sued as a co-trustee for breach of fiduciary duties. The property continues to decline in value, while the expenses continue to increase. The homeowner’s insurance could be dropped on the basis that the house has been vacant for over 30 days (it’s been over two years). That puts coverage at risk in the event of a fire--a realistic possibility since the electric is in very poor condition and needs upgrade.

Last year I spoke to all my siblings during a family party, and none of them mentioned what I discovered on my way home. While I was in the neighborhood, I stopped to visit the property and discovered that a tenant had been moved in without my knowledge or consent. When I subsequently questioned my siblings, I was told the tenant was paying the utilities only, “in cash, no records.” Considering the very poor condition of the house, I’m concerned that someone (the tenant or one of his guests) will trip on the broken stairs, get hurt and then sue us. Or that the extension cords that are tacked around the baseboards due to the absence of wall outlets will cause a fire and insurance won’t cover it.

I wake up at night worrying what could happen, so I paid out of my pocket for an appraisal report, and I suggested that they get their own appraisal so that we could split the difference and I could walk away from the table. They refused to pay for their own appraisal. When I accepted their offer of a buyout at significantly below the appraised value, they withdrew their offer.

As for having years to figure it out, we’re all well over 60 years old and would rather not spend what active years we have left this way.

However, neither suggested that my seeking to resolve the issue could be a breach of my fiduciary duties.

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What wonderful words, "resolve the issue". If by resolve the issue you mean negotiations, then no breach. If by resolve the issue is, against the wishes and goals of the other beneficiaries and in order to benefit your goals you unilaterally put the property on the market, clearly a breach.

I have met with two attorneys over the past couple of years (paid out of my pocket). They advised against seeking a forced sale since it is the way all beneficiaries end up losing. They also advised that seeking legal removal of the co-trustee would be so costly it would not be worthwhile, considering the value of the property.

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I agree with the addition that I don't see the legal reason for removal of the co-trustee. Negotiation is the only realistic solution here.

However, neither suggested that my seeking to resolve the issue could be a breach of my fiduciary duties. In fact, the opposite. I was advised that by not acting, I could be sued as a co-trustee for breach of fiduciary duties.

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I agree. The property should be distributed if a deal cannot be reached.

The property continues to decline in value, while the expenses continue to increase. The homeowner’s insurance could be dropped on the basis that the house has been vacant for over 30 days (it’s been over two years). That puts coverage at risk in the event of a fire--a realistic possibility since the electric is in very poor condition and needs upgrade.

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Agreed. Action should be taken or you and your co-trustee are at risk. The problem, it seems, is you want to deal with this by selling. That is not necessary and seems to achieve your goals over the apparent goals (An assumption, I know.) of the others.

Last year I spoke to all my siblings during a family party, and none of them mentioned what I discovered on my way home. While I was in the neighborhood, I stopped to visit the property and discovered that a tenant had been moved in without my knowledge or consent. When I subsequently questioned my siblings, I was told the tenant was paying the utilities only, “in cash, no records.” Considering the very poor condition of the house, I’m concerned that someone (the tenant or one of his guests) will trip on the broken stairs, get hurt and then sue us. Or that the extension cords that are tacked around the baseboards due to the absence of wall outlets will cause a fire and insurance won’t cover it.

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If approved by the co-trustee, this may be the first facts which indicate a breach by him.

As for having years to figure it out, we’re all well over 60 years old and would rather not spend what active years we have left this way.

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Distribute the property. From reading between the lines, I suppose the money is more important to you then to them right now. They know this and aren't dealing. They have no legal duty to deal. Sorry. I'd get out of your fiduciary relationship with them as soon as possible. Distribute the property and walk. Or, you might resign as trustee and write the co-trustee your facts and say he alone is now responsible for any loss past this date. Then he is forced to think about selling or distributing the property immediately. You still might just end up in the same place (jointly held property you can't really sell), but at least your personal risk goes way down.

Joint owner vs fiduciary responsiblity

Thank you again for very enlightening responses. I have learned a great deal already!

I think I’m beginning to understand you. When you say “distribute the property,” do you mean terminate the trust and transfer the deed to all beneficiaries? Would that put everyone on equal footing, i.e., there are no trustees and no one has fiduciary responsibility? It would be a great relief to have that risk removed. How can I do that without the other co-trustee’s agreement?

Before I shift from having trustee responsibility to being a joint owner of a property I can’t really sell, would there be any way to minimize my risks in the event of a fire or lawsuit by someone hurt on the property? The other co-trustee is the only named insured on the homeowner’s policy. He says that it had to be combined with his other properties in order to get insurance without having to upgrade the electric. He pays the premiums in his own name. I am sure he is reimbursed by the executor, but it’s probably in “cash, no record.”

I would rather they buy me out than put the property up for sale. When I am no longer trustee and we are all just joint owners, would they have any legal obligation to buy out my share if they don’t want to sell and I want out? Or is a partition action/forced sale the only option?

You are correct. I need the money more than the others, along with one other sibling, who won't risk displeasing the others because they still hold money from the estate (they are executor and alternate executor). They did not probate the will, and they refuse to provide a final accounting. We have received distributions of some money. According to the attorney who handled my mother’s estate, the executor, who was the beneficiary on her accounts, was to, before she died, either divide the accounts into each of our names, or else add our names as beneficiaries,. Subsequently, during the year before she died, they asked for a large amount for their kids, which they got, and then when beneficiary changes were made, my name was not added. When distributions were made to the others, my request to be included was dismissed, and I only received a share because I made a big enough stink.

Thank you again for all your help!

Co-trustee brought in tenant without my knowlege

I forgot to add, it was the other co-trustee who brought in the tenant, over the objection of one of the other siblings. When I let the other co-trustee know how appalled I was to find out what he did without my knowledge, he wrote a very apologetic email saying he was not intentionally excluding me. Later in a heated phone conversation, he contradicted his email by saying (off the record) that he had told everyone except me.

I think I’m beginning to understand you. When you say “distribute the property,” do you mean terminate the trust and transfer the deed to all beneficiaries? Would that put everyone on equal footing, i.e., there are no trustees and no one has fiduciary responsibility? It would be a great relief to have that risk removed. How can I do that without the other co-trustee’s agreement?

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You probably can't. That's why I gave the walk option.

Before I shift from having trustee responsibility to being a joint owner of a property I can’t really sell, would there be any way to minimize my risks in the event of a fire or lawsuit by someone hurt on the property? The other co-trustee is the only named insured on the homeowner’s policy. He says that it had to be combined with his other properties in order to get insurance without having to upgrade the electric. He pays the premiums in his own name. I am sure he is reimbursed by the executor, but it’s probably in “cash, no record.”

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This could be considered a comingling of assest and is probably a breach. Also, both trustees probably be on the policy. (Although I am unsure if that would be a breach.)

I would rather they buy me out than put the property up for sale. When I am no longer trustee and we are all just joint owners, would they have any legal obligation to buy out my share if they don’t want to sell and I want out? Or is a partition action/forced sale the only option?

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Partion. Or, rent to a biker gang and share the profits with the others. The particular twists you can do as a co-owner to force the issue outside court depends on everyone's motivation and isn't really a legal question.

You are correct. I need the money more than the others, along with one other sibling, who won't risk displeasing the others because they still hold money from the estate (they are executor and alternate executor). They did not probate the will, and they refuse to provide a final accounting. We have received distributions of some money. According to the attorney who handled my mother’s estate, the executor, who was the beneficiary on her accounts, was to, before she died, either divide the accounts into each of our names, or else add our names as beneficiaries,. Subsequently, during the year before she died, they asked for a large amount for their kids, which they got, and then when beneficiary changes were made, my name was not added. When distributions were made to the others, my request to be included was dismissed, and I only received a share because I made a big enough stink.

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There are clearly problems here, but as you were advised, to what end? The courts and lawyers can suck money faster than anything but...well anything. At some point, if you're not getting any benefit from their mal or misfeasance, you warn them the sucking machine is about to start. Your position doesn't get any worse and theirs probably will.

Trust property distribution dreams

Excellent points and suggestions. I particularly like the biker gang idea. And since it’s a legal two-family, maybe it can be converted back to accommodate both the biker gang and a halfway house for former Federal prison inmates. : )
The responses have been really helpful. Not what I wanted to hear, but what I needed. Thanks again.
Ciao for now…