How can we fund Living Trust and retain home for provision of disabled beneficiaries?

[ProPerDoper]

What is the name of your state (California)?

I am executor of my father's Living Trust and Will. The curent Trust provides for the sale of his home, (encumbrance free) and distribution of proceeds at 20% each to 5 separate beneficiaries.

However, two of the beneficiaries may be living at the home at time of death. His desire is to retain the home to care for those two (one of which is disabled) yet provide for the distribution of funds to the remaining three beneficiaries upon his death.

Is there a vehicle that could provide for funding of the three beneficiaries percentage of the sale of the home, (or some predetermined dollar amount) from the equity in the home, allowing for the home to be retained for some time period?

Say for example the estate would take out an equity loan against the home to fund the other three beneficiaries. This loan would also have enough of a balance to pay interest only payments required to sustain the equity loan for a period of say...ten years. These interest only payments would be deducted from the percentage due to the two living in the home, and the remaining proceeds from the sale of the home would then go to those two.

Can a trust/will be constructed that would accomplish this? How?

 

[JETX]

Can a trust/will be constructed that would accomplish this? How?

Very simple. Talk with a good local trust attorney.

 

[ProPerDoper]

Yup....sounds like good advice.


But I'm hopeful that someone can give us a bit more direction so that Dad and I can discuss further before I have to return home tomorrow.

Is there a name for such a vehicle? How is it set up?

Any details would be appreciated, and would allow us to pursue further with an attorney later.

I'm not about to suggest that we could do this without an attorney.

 

[ProPerDoper]

The forum name was thought of after 8 years of ugly divorce litigation. It's a spin on representing one's self....or litigating "in Pro Per". Has nothing to do with dope.

When Ali would win in the ring, he would say that his opponent had just be ropeadoped. When I would be able to muster enough energy to appropriately answer in court against the counties most aggressive attorney, I would joke to myself about him being "properdoped".

Give it another thought, for dad, if not for me please.

 

[tranquility]

I'm not sure this can be accomplished for practial reasons. Simply because the time value of money, you can't really have an equal distribution with a single asset with some getting paid now and some later. It's not a trust issue, but a real world one. Besides, it will be very difficult in this market, if not impossible, to take out partition-type loans on a property in a trust. I don't think you will find a solution. If you do, creating an appropriate trust will be simple.

 

[TrustUser]

as tranquility said, if you can find a way to do it, you can certainly create a trust to do that.

a trust can do pretty much anything you want it to do. it is just a set of instructions.

i dont know if you can get an exact distribution, but then you dont have to. remember, your dad can do whatever he wants.

but your general idea would seem to get you most of the way there, that i suspect it would seem to your dad that his wishes were basically being fulfilled.

upon your dad's passing, the trustee could get an appraisal and a loan on the house, such that the majority of the loan proceeds would go towards paying the shares of the 3 beneficiaries, while the other 2 live in it.

you would want to make sure there is some sort of exact details that are followed, knowing ahead of time that it wont be exact.

of course, the dad could give the house to charity, so that there will be no squabbling.

i think you get the picture on that one.

 

[truthandhonor]

This sounds like a recipe for disaster. Big time. First of all, a grantor cannot just do anything they want. They cannot do anything that is illegal. Secondly, the siblings are already squabbling and wanting their own piece of the pie outirght and free of trust paid in cash yet the others do not get theirs. If Dad's wishes are to take care of the two siblings who are infermed or disabled for them to live in their house, then it is most likly what is going to happen is not what the rest of the siblings are going to like and that is, the two siblings get the house and perhaps upon the death of the last disbaled sibling, the house can be sold to be divided up amongst the others. Make sense?Your Dad can set up his trust to accomplish this. Obviously, it is what he wants.

 

[anteater]

This sounds like a recipe for disaster. Big time. First of all, a grantor cannot just do anything they want. They cannot do anything that is illegal. Secondly, the siblings are already squabbling and wanting their own piece of the pie outirght and free of trust paid in cash yet the others do not get theirs.....

Where do you see any suggestion that the father is trying to do anything illegal? Or that the siblings are squabbling about anything?

 

[truthandhonor]

Trustuser said "squabling." And I'm not saying the father is doing anything illegal. I am saying trusts are sometimes set up and later may become null and void because they are illegal,, or parts are illegal. Here, it seems, you have a sibling who is a trustee who is also a benficiary amongst other beneficiaries (HUGE MISTAKE) getting together with Dad to make changes in his trust. Uh..uh..! If it is done to this beneficiary's benefit and the detriment to another beneficairy such as the two living in the house, problems will occur in the futurethat Dad can better avoid. Guess what? Trustees can be sued. They can be removed, sued, and even land in jail. And with something this odd or complicated, a bona fide certified fiduciary banking trust insitution with no stake in the trust can better administrate it in any event.

Tranquility made the comment this partifcular scheme may not be done for practical reasons. I am saying there are times when trusts later need to be modifed after the grantor dies to accomplish the purposes of the trust and they most ceritanly can be. What happens too many times, and I think judges are on to this, is that siblings take an unfair advantage of another sibling(s) because they can.

Here you have one sibling who is no longer working, who became ill or infirmed who is drawing disability now with anothe sibling persumably looking after the infirmed sibling. A disabled person may or may not have the extra money to fight a costly court battle. The reason why I see something horrilble brewing is because there are sibilngs here who want money they believe they are entitled to out right and free of trust. What are you banking on? The disadvantaged to be foolhearty enough to let the others get away with it? Or the downtrodden innocent to be cheated by more powerful and business savvy siblings? Big mistake. So if it is that the Dad wants the two sibilngs taken care of and the house not sold, he better leave the house just to them. The siblings the father intends to provide for, those eliving in the house, are not in the possition to buy the other siblings out. They should get the house and monies to keep up the house so they are provided for.

I see a problem when a trustee/sibilng is looking for a way to get what he thinks should be his share out from the house. I also see the other siblings taking sides with him to get what they think should be their 20% share. If the one exerting controls as trustee is doing this now, look out. Dad's wishes are not in line with their desires.

 

[ProPerDoper]

There are some excellent points to be considered here, and I appreciate the perspective.

Truthandhonor provides good insight, however clarification is warranted. Mom and Dad long ago appointed me (sibling and beneficiary) executor of their living trust and will. The only reason behind their decision is that I'm able to travel to the city where they live most easily, and I have several years of divorce, personal injury, and bankruptcy litigation experience as a Pro Se litigant. Now we clearly understand that this doesn't prepare me for Trust or Probate law....none of us are mistaken here in that regard.

Trustuser said "squabling." And I'm not saying the father is doing anything illegal. I am saying trusts are sometimes set up and later may become null and void because they are illegal,, or parts are illegal. Here, it seems, you have a sibling who is a trustee who is also a benficiary amongst other beneficiaries (HUGE MISTAKE) getting together with Dad to make changes in his trust. Uh..uh..! If it is done to this beneficiary's benefit and the detriment to another beneficairy such as the two living in the house, problems will occur in the futurethat Dad can better avoid. Guess what? Trustees can be sued. They can be removed, sued, and even land in jail. And with something this odd or complicated, a bona fide certified fiduciary banking trust insitution with no stake in the trust can better administrate it in any event.

Tranquility made the comment this partifcular scheme may not be done for practical reasons. I am saying there are times when trusts later need to be modifed after the grantor dies to accomplish the purposes of the trust and they most ceritanly can be. What happens too many times, and I think judges are on to this, is that siblings take an unfair advantage of another sibling(s) because they can.

Here you have one sibling who is no longer working, who became ill or infirmed who is drawing disability now with anothe sibling persumably looking after the infirmed sibling. A disabled person may or may not have the extra money to fight a costly court battle. The reason why I see something horrilble brewing is because there are sibilngs here who want money they believe they are entitled to out right and free of trust. What are you banking on? The disadvantaged to be foolhearty enough to let the others get away with it? Or the downtrodden innocent to be cheated by more powerful and business savvy siblings? Big mistake. So if it is that the Dad wants the two sibilngs taken care of and the house not sold, he better leave the house just to them. The siblings the father intends to provide for, those eliving in the house, are not in the possition to buy the other siblings out. They should get the house and monies to keep up the house so they are provided for.

I see a problem when a trustee/sibilng is looking for a way to get what he thinks should be his share out from the house. I also see the other siblings taking sides with him to get what they think should be their 20% share. If the one exerting controls as trustee is doing this now, look out. Dad's wishes are not in line with their desires.

Dad recently underwent a triple bypass operation. As such, he's concerned that the desires set forth in his will are understood by the executor (me) and implemented. He has no intention of changing his will, only a desire to express his concerns for all of his kids. There is no squabbling between siblings taking place, as none of this has been discussed amongst them, and no sibling has expressed a desire to "get their share" immediately upon Dad's death. This post is simply an opportunity to explore options.

So...while we appreciate the well thought out cautions, we'd rather focus on the possible options available to accomplish all of Dad's concerns/wishes.

 

[TrustUser]

i did not mean to imply that the siblings are currently squabbling.

what i meant is they better be happy to get anything, and dont worry if things dont come out exactly.

and i also did not mean to imply anything about the dishonesty of the trustee.

so in that regard, the rest of my post still stands.

you can write a trust to basically accomplish what the father intends - using the house for living purposes for the 2 benes, while giving the other 3 a nice size inheritance.

my point about squabbling was dont worry that you get 100, and he gets 120, etc. be thankful you are getting something. that is a helluva lot better than a lot of people in this world are getting.

actually, my initial reaction was that there really was not a lot of squabbling, and there was an honest attempt on the part of the trustee to get a trust written that matched the father's desire. was more interested in making sure it stayed that way.