Selling property from a trust.

What is the name of your state (only U.S. law)? Californa
My grandmother created an irrevocable trust in 1999 naming my cousin as executor and later as succesor trustee after her health got really bad. There were 4 properties in the trust that were to be equally shared among 5 grandchildren and one property was to be given to only the executor and his sister. The trustee/executor sold the property several years before my grandmothers death and purchased two other income producing properties. My question is whether he and his sister are still exclusively entitled to those properties since at the time of my grandmothers death, the property they were to receive was no longer an asset of the trust. Does this mean that those two properties that he purchased are to be included in the trust and equally distributed to all five beneficiaries?
In addition, he royally screwed up the estate tax filing and the IRS came back demanding $800,000 and now he is claiming that we were all overpayed and wants us to give him money back. Isn't he responsible for any errors he commits? I had tried to convince him that it was wrong and that he needed to pay Generation Skipping taxes, reappraise the properties, and make sure that the Limited Partnership was valid and would be accepted by the IRS. Also, two of the beneficiaries blew through their inheritence in a year and cannot make a repayment, and he is not asking them for anything, but he expects me to make a repayment. I am in the process of getting an attorney, but wanted some feedback. I'd be happy to provide any additional information if things are not clear.
Thanks.

How were "those two properties that he purchased" titled? Were they ever titled to the trust? Did they belong to the grandmother?

Other than that, you need to talk to an attorney. Sounds like there is not much family harmony. This should fatten the wallet of more than one attorney.

Selling property out of a trust

I am in the process of pulling the records on those properties from the clerk recorders office and I believe that they were included in the trust at the time of my grandmothers death as I know that there are grantor/grantee property documents pertaining to those properties dated a year and a half after the death of my grandmother that were filed by the executor.
So, if those properties were included in the trust at the time of my grandmothers death and were titled as assets of the trust, does that mean that the two beneficiaries are not entitled to the property or cash from the sale of the property that was to be bequeathed to them?
It's not so much a question of no harmony in the family, it is more about the executor not sharing any information with anyone. There were never any meetings or sharing of the accounting which is why the IRS declared the limited partnership invalid. In fact, he is asking for repayment even though he has never sent me any of the accounting documents to provide evidence of overpayment, so what, am I supposed to just take his word for it? I don't think so.
Yes, I am getting an attorney and considering suing for gross negligence and for him to distribute equally the proceeds from him stupidly selling his inherited property out of the trust.

where does this limited partnership come into play?

Re: limited partnership

Our attorney advised my cousin to set up a limited partnership for my grandmother and us five beneficiaries in 2000. One of the properties was put into the partnership and each year $15,000 in equity of the property was gifted to each of us so that we could eventually be gifted the entire property without having to pay estate taxes on it. He sold that property and distributed to proceeds to each of the five beneficiaries equally after capital gains taxes. We were never gifted enough to cover the $795,000 the property sold for so I am not sure how he did that. He also placed another property in the partnership and sold that immediately after placing it in there. The property that was to go to the executor and his sister was never placed into the limited partnership, it was just an asset of the trust. The IRS invalidated the limited partnership and deemed it an attempt at tax evasion since there were not meetings or records and also on the basis that my grandmother was really old and in bad health. So all of the $15,000 gifts we had received became invalid and the full estate tax was levied on that property. We had a really inept attorney and CPA who didn't even know what generation skipping taxes were and an inexperienced trustee/executor handling a 5 million dollar estate, so this is what can be expected when nobody knows what they are doing.

5 million dollar estate

Click to expand...

and that is why none of this should be handled by a layman.


I don't want to get involved with this because it is over my head and would do you no good but from what I read, you have all sorts of confusion in this thread.

You have properties owned by the LP and you have properties owned by the trust and it appears you somehow have mixed the two together. It just isn't making any sense.