Step changed Deed from Living Trust

[penelope10]

1) How would you get this back into the trust? These two people sound mentally incompetent to do anything at this point.

2) You asked, "My concern was what, if any, would the ramifications be for us tax wise."

No ramifications.

3) You said, "I was under the impression that because the house was under the name of a Trust, it would be harder to encumber the property, and thus it would be harder for someone to take advantage of her".

You said, "I believe that my stepsister is the Trustee of the Trust." That is important, but with nothing in the trust, there is nothing to be trustee. You might find out for sure.

Exactly, there is nothing in the trust and that is our concern. There is no separate will that exists. So our fear is that when Dad dies there will be nothing covering his share of the interest in the house. That in some way we could be found to be heirs to this half or a portion to this half. We don't want to be heirs. We would gladly sign over any of our share to her, but we also have concern over tax ramifications as far as inheritance tax or any taxes owned on the property as well should this become necessary.

I wish that she had just left everything in the trust the way that it was. All of the funds would have been used for her care and were clearly spelled out. Now I am afraid that there could be a mess that might financially impact us in the form of taxes in the future. Or impact her and my Dad should someone decide to to take advantage of her by getting her to deed her portion of the house over to them.

I am in hopes that if I notify my step sister that the deed has been changed that somehow she will find a way to have the house deeded again into the name of the trust. Or at least have a will set up leaving all of the funds to my step mother with my step sister being the executor of those funds.

 

[curb1]

1) You said, "we also have concern over tax ramifications as far as inheritance tax or any taxes owned on the property as well should this become necessary."

There doesn't have to be, and there most likely will not be any "tax ramifications".

2) You need to find out exactly how the property is titled. It most likely won't be going back into the trust. Does stepdaughter have a Power of Attorney for mother?

3) Your fears seem unfounded. Has anyone discussed this with an attorney?

 

[penelope10]

1) You said, "we also have concern over tax ramifications as far as inheritance tax or any taxes owned on the property as well should this become necessary."

There doesn't have to be, and there most likely not have any "tax ramifications".

2) You need to find out exactly how the property is titled. It most likely won't be going back into the trust. Does stepdaughter have a Power of Attorney for mother?

3) Your fears seem unfounded. Has anyone discussed this with an attorney?

No, my step sister does not have a power of attorney for her mother. There is no way in hell my step mother would agree to that. My step sister has also contacted her mother's psychiatrist about concerns she has regarding her mother's medications. Very little was done about that.

My Dad up to a couple of years ago understood the necessity of setting things up so that my step mother could not get her hands on the funds of the house. That's why the home was set up in a trust with my step sister as trustee after my Dad passes. So my step mother could not blow through the funds or be taken advantage of. (And thus, her family would have the money to assure that she would be properly cared for).

There are two bedrooms (its a three bedroom house) that are literally stacked from floor to ceiling with just clothes that my step mother bought over the years. She literally went through almost all of their money shopping. I didn't know that things were so out of control until I used the back bathroom in their home. The bathroom runs in between the two bedrooms, you have to go through a bedroom to get to the bathroom. (My step mother was out at the time).

She's has tried on numerous occasions to fire the caregiver. Fortunately, the caregiver is thick skinned. She informed my step mother that she works for my step sister and that only my step sister could fire her. I don't think that my step mother is doing this to be mean, it's just that she cannot accept that she cannot take care of Dad or really herself.

It's now come to the point that Dad can't think clearly either. (Thus the deed getting changed). I will contact my step sister and also may speak to an attorney myself regarding our concerns.

 

[TrustUser]

something does not make sense to me.

you say your dad made the living trust, so stepmom would not blow through the finances. so it seems obvious that he would not have okayed the process of it being taken out of the trust.

and then your step sister was trustee when your dad passed.

how is it that your step mom was able to get the property titled back in her name ?

with any deed that i have ever heard of - in order to transfer from grantor to grantee, every grantor needs to sign. and if deceased, then another form needs to be recorded.

how was the property titled when in the living trust ?

it seems to me that the step sister would be aware of how the property is titled, unless the step sister never attempted to take over trusteeship of the property.

typically when a deed is recorded by hubby and wife to place in their living trust, it is titled "john smith and mary smith, trustee of the abc living trust, dated mm/dd/yy".

if john dies, mary can record a document removing john as trustee, leaving her as sole trustee.

 

[TrustUser]

i re-read the posts.

i see that your dad is still alive. i thought he had passed.

so apparently both the dad and mom signed a deed to take it out of the living trust and back into their names ?

the only way that things could make a difference with inheritance tax is that in trust, the assets can be split to take advantage of the exclusion for both people, if the trust is written up as an a/b trust. and this only comes into account when the asset worth is high enough that it is subject to estate tax. that exclusion amount continues to fluctuate. from what i am hearing, that is not gonna be an issue for you with whatever is left to inherit.

 

[penelope10]

something does not make sense to me.

you say your dad made the living trust, so stepmom would not blow through the finances. so it seems obvious that he would not have okayed the process of it being taken out of the trust.

and then your step sister was trustee when your dad passed.

how is it that your step mom was able to get the property titled back in her name ?

with any deed that i have ever heard of - in order to transfer from grantor to grantee, every grantor needs to sign. and if deceased, then another form needs to be recorded.

how was the property titled when in the living trust ?

it seems to me that the step sister would be aware of how the property is titled, unless the step sister never attempted to take over trusteeship of the property.

typically when a deed is recorded by hubby and wife to place in their living trust, it is titled "john smith and mary smith, trustee of the abc living trust, dated mm/dd/yy".

if john dies, mary can record a document removing john as trustee, leaving her as sole trustee.

That is how the deed was titled in 2004: John Smith an Mary Smith, Joint Living Trust. Then the deed was transferred on 06/2005 and reads simply John Smith and Mary Smith. I don't know how my step mother got the deed transferred into just she and my Dad's name. I assume that somehow she talked Dad into signing for the change.

As I said, the strange goings on were brought to my sister and my attention by Dad's caregiver. She informed us that she somehow caught my step mother running up credit card bills and that the bills weren't coming to the house, but to a mail facility. When I looked into the deed records I found a different mailing address. I googled the address and found that it was a business that provides mailboxes.

 

[penelope10]

i re-read the posts.

i see that your dad is still alive. i thought he had passed.

so apparently both the dad and mom signed a deed to take it out of the living trust and back into their names ?

the only way that things could make a difference with inheritance tax is that in trust, the assets can be split to take advantage of the exclusion for both people, if the trust is written up as an a/b trust. and this only comes into account when the asset worth is high enough that it is subject to estate tax. that exclusion amount continues to fluctuate. from what i am hearing, that is not gonna be an issue for you with whatever is left to inherit.

Thanks I guess we must have posted at about the same time.

So I am correct in assuming that despite the fact that there is no will that all of the funds will go to my step mother. (Since the deed of the house is no longer in the trust's name, but titled in both of their names)We just don't want to inherit any of these funds when Dad passes and want them all to go to her. Wasn't sure how this would work without a will and what the potential problems etc would be for us tax wise as we would either refuse the inheritance or sign it over to her if necessary.

 

[TrustUser]

state laws are different.

when you say in both their names, are they joint tenants or tenants in common ?

joint tenant should pass directly to the stepmom, assuming her hubby dies first.

but if it is tenants in common, each tenant has the right to pass his inheritance on to others. but being that there is no will, i am guessing that the state's intestate laws will apply.

each state can have its own laws. and whether it is a community property state or not, usually makes a difference.

i think you need to verify that the hubby's portion will pass on to the stepmom (within the laws of your state).

 

[anteater]

Penelope:

I know that it is a holiday weekend, but trying to work this out on an internet discussion forum is just going to result in going round and round. You really need to get with stepsister and consult an attorney.

As to the current deed... As TrustUser said, state laws vary. However, my understanding of Texas law is that there is no presumption of right of survivorship, even between spouses, unless it is explicitly stated. And I seem to recall reading varying opinions about whether stating that on the deed is sufficient or whether there needs to be a separate writing to that effect.

Also, I want to tentatively retract what I mentioned about a disclaimer if your father's share of the house needs to be probated under intestacy. I noticed you mentioned that you have children. Usually, the effect of a disclaimer is that the person disclaiming is treated as if predeceasing the testator. In that case, the asset that is being disclaimed would pass to that person's heirs rather than to the other heirs.

For those reasons, you really need to consult with an attorney.

One other note... For tax purposes, a living trust and a probate estate are essentially the same.

 

[nextwife]

Just an FYI: If the house had been legally and properly conveyed INTO the trust, then ONLY the trustee(s) would have the legal right to convey the property OUT of the trust. Depending on who controls the trust, Stepmom's deed out of the trust may not be valid. Investigating whether it was properly conveyed OUT is an important place to start.

 

[penelope10]

Many thanks to all. I will call my step sister and discuss with her. As I stated, I was under the impression that my step sister was the trustee. If this be the case, this may solve the problem. If for some reason Dad and his wife were each trustees then this may end up being a real mess. Just wanted to further add that this is an even more complicated situation because this is a home that my father and mother owned together. My Mom willed her portion to Dad upon her death and should he not survive her, the house was to go to my sister and I. I did a little bit of research a few minutes ago and found out that up until the year 2000 a spouse could not convey 100% of an inheritance to a surviving spouse through deed alone if living heirs exist. Fortunately those laws have changed, but the deed needs to worded correctly in order to do so. So if my step mom simply changed the name of the deed without the correct wording there could be problems.

All of us want to do the right thing and assure that my step mother is taken care of. My Dad for years protected and took care of her. And to the best of her ability she has tried to take care of him too. It's a tough situation when you are dealing with two individuals that really aren't competent. Plus step mother is a difficult person and has been for almost all of her adult life due to her illness. I really feel for my step sister as she will have the responsibility of trying to take care of her Mom once my Dad passes. (Her brother has no interest in helping and lives out of state).

I'm thinking that if worse comes to worse that perhaps we can quitclaim the deed to step mother if necessary if this can't be straightened out. Of course this may not be possible because my sister and I each have children, who might have to quitclaim their interest also. (And one of those children is a minor still).

Thanks again,

Pen