Help with odd way brother is attempting to do accounting of procceds of sale of home

[indyguy1]

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

Mother passed away leaving very little in funds but a home that was paid for. The home was in trust eqaully to her 3 adult children. Prior to her death monies were spent by one of the 3 children to provide her with some comforts she refused to pay for herself. All 3 children agreed the money would be repaid from the proceeds of the sale of the home in trust to all 3 of them. After her death portions of the upkeep of the home were paid for by each of the 3 children in differing amounts because the house had not sold yet and there was no money left by the deceased to pay for these things.. Again the agreement between the 3 children was the money put out to pay for taxes, utilities, etc. would be repaid from the proceeds of the sale of the home. The home has been sold and the proceeds from the sale of the home are in a trustee account set up by the child that is the trustee. My thought was that each of the 3 children would be paid back the amount they paid out for the things that they had paid for, and had been agreed on by all 3 children. One of the 3 children is now saying that is not proper accounting. They are saying if all the money put out by each is repaid then it is as if there were no bills and the only fair way to do this is to take each bill divide it by 3 then only pay the person that paid out the money up front 1/3 of what they actually paid and the other 2/3's stays in the account to be divided 3 ways. This person is saying since the proceeds of the sale of the house belong to all three children this is the fair way to handle this. Does this make sense to anyone? Again these bills were paid out of the pockets of the 3 adult children so shouldn't the all the money they spent for the agreed prior death comforts and after death bills be repaid to each before the balance of the proceeds of the sale of the home be divided equally amongst the 3 adult children? This just doesn't make sense to me. HELP!!!!!!

 

[OHRoadwarrior]

Not to be Capt. Obvious but why don't you figure out the net effect of the 3 expenditures and pay the balance to that person. Assuming of course any of this is permitted by the terms of the trust to begin with. Ultimately, the terms of the trust control what can be done.

 

[indyguy1]

Not to be Capt. Obvious but why don't you figure out the net effect of the 3 expenditures and pay the balance to that person. Assuming of course any of this is permitted by the terms of the trust to begin with. Ultimately, the terms of the trust control what can be done.

There is nothing in the trust that addresses the repayment of monies paid out as the deceased had no clue any money would need to be paid put, she was 90 years old and really had no idea about the cost of anything these days. The problem is not all three paid put the same amounts before her death and after her death. The brother that wants to do this voodoo accounting paid out less than the other two so he would benefit from this wacky accounting. The trustee seems to think whatever this brother thinks is right is the way to go. I want this to be done properly. If this odd way to me accounting is the way these things are handled I will go along with it. It just sounded so strange to me I thought I'd ask on a forum that addresses wills, trusts and such. I just don't get why the money owed to each person can't be paid back before the balance of the proceeds is distributed. Thanks for responding!

 

[anteater]

I just don't get why the money owed to each person can't be paid back before the balance of the proceeds is distributed. Thanks for responding!

Neither to do I. The normal method would be to reimburse whoever advanced the funds before the remainder is distributed according to the trust's terms.

The brother that wants to do this voodoo accounting...

An apt description.

 

[indyguy1]

Neither to do I. The normal method would be to reimburse whoever advanced the funds before the remainder is distributed according to the trust's terms.


An apt description.

Thank you so much! Common sense was telling me that reimbursement should take place before the remainder was distributed, and now I have you anteater, that agrees with me! I just wish I could find some sort proof I could show to the siblings that what you are saying and what I feel is the normal method!

indyguy1

 

[anteater]

If you want to get sticky about things, the amount spent for those "comfort" items before Mother passed would not be an obligation of the trust to reimburse unless such an agreement was in writing. But, one of the nice things about a trust is that it is privately administered unless an interested party drags an issue before a court. So, if the interested parties agree that those items be reimbursed...

I don't know that you are going to find any sort of "proof" anywhere other than each child should be reimbursed for what each child expended on behalf of the trust.

 

[indyguy1]

If you want to get sticky about things, the amount spent for those "comfort" items before Mother passed would not be an obligation of the trust to reimburse unless such an agreement was in writing. But, one of the nice things about a trust is that it is privately administered unless an interested party drags an issue before a court. So, if the interested parties agree that those items be reimbursed...

I don't know that you are going to find any sort of "proof" anywhere other than each child should be reimbursed for what each child expended on behalf of the trust.

In the way of proof what I was looking for was perhaps a law office website that sates reimbursement takes place before the balance is distributed. Even if I don't find proof as to what the norm is and they go forward with this odd ball accounting I feel better that someone out there agrees that what the sibling is suggesting is not the norm. Even if I am shorted financially I feel better.

 

[OHRoadwarrior]

The entire thing is moot unless we know what types of payouts the terms of the trust allow.

 

[tranquility]

A man has three sons (A, B, C) and three valuable statues (Andolini, Belini, Celini) and leaves them in a living trust to their sons respectively (A-Andolini, B-Belini, C-Celini) because he thought that best. The sons make an "agreement" that all the statutes should be sold and the money split evenly. (Perhaps to prevent the risk of varying valuations.) Dad dies and A becomes the trustee.

1. Can A distribute the statues according to the trust giving himself the Andolini, B the Belini and C the Celini?
--Yes. It is not a fiduciary breach to follow the terms of the trust. The beneficiaries' agreement does not change the terms of the trust.

2. Can A sell the statues and distribute the money equally?
--Strictly speaking, no. But, the only people with standing to challenge that is the beneficiaries. Because of the "agreement", they may be estopped from suing over the distribution. I believe the agreement may have to rise to the level of a contract and all the issues related to that, but, if A did sell and distribute he would probably not have any problem.

3. If A distributes according to 1, could he be sued otherwise?
--If the "agreement" rises to the level of a contract, yes. He can be sued not for a fiduciary breach, but for breach of contract. That difference is important for measuring damages.

That does not give us an answer here, but guides depending on other factors.

The home was in trust eqaully to her 3 adult children. Prior to her death monies were spent by one of the 3 children to provide her with some comforts she refused to pay for herself. All 3 children agreed the money would be repaid from the proceeds of the sale of the home in trust to all 3 of them.

This is an easy one. No, the trust is not required to distribute according to the terms of the agreement. I am not even sure this rises to a contract, but it probably would. After distribution, the children can deal with this breach on their own terms. There could be many problems in proving things up including the statute of frauds. I have no idea of the actual facts and don't know the potential results.

After her death portions of the upkeep of the home were paid for by each of the 3 children in differing amounts because the house had not sold yet and there was no money left by the deceased to pay for these things.. Again the agreement between the 3 children was the money put out to pay for taxes, utilities, etc. would be repaid from the proceeds of the sale of the home.

Same answer as above with one caveat. IF this "agreement" could be considered to be with the trustee and IF the trust allows for such power of the trustee, if the trustee does not pay back the money according to the contract he made, then he is in breach of that (those) contracts and would be personally responsible. If he were to do some repayments that benefited him over the other beneficiaries, he could also be in breach of his fiduciary duties.

The home has been sold and the proceeds from the sale of the home are in a trustee account set up by the child that is the trustee. My thought was that each of the 3 children would be paid back the amount they paid out for the things that they had paid for, and had been agreed on by all 3 children. One of the 3 children is now saying that is not proper accounting. They are saying if all the money put out by each is repaid then it is as if there were no bills and the only fair way to do this is to take each bill divide it by 3 then only pay the person that paid out the money up front 1/3 of what they actually paid and the other 2/3's stays in the account to be divided 3 ways. This person is saying since the proceeds of the sale of the house belong to all three children this is the fair way to handle this.

I am uncertain as to how this works logically. There must be a better explanation as to the effect.

This person is saying since the proceeds of the sale of the house belong to all three children this is the fair way to handle this. Does this make sense to anyone? Again these bills were paid out of the pockets of the 3 adult children so shouldn't the all the money they spent for the agreed prior death comforts and after death bills be repaid to each before the balance of the proceeds of the sale of the home be divided equally amongst the 3 adult children? This just doesn't make sense to me. HELP!!!!!!

I think I answered the question above. It all depends.