Legal Fees, Trust, Real Estate

[Eva 14]

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

My mother passed away a year ago, and my father passed away a year before her. My elder brother is the Trustee. The home that I've lived in for 20 years is now owned by the Trust. I own 50% and each of my brothers owns 25%.

Dealing with my elder brother has been a nightmare, to say the least. He is hostile, secretive, and refuses to share any information. Back in January, I retained my own Trust attorney to deal with these issues.

A month ago, my elder brother sold my home for well below market value, without informing me or my other brother. He signed papers, with a Realtor. I believe these actions were taken out of spite, and perhaps some stupidity. I was astonished at just how disrespectful this brother has been to me, and also to my other brother. Selling the house without telling the other beneficiaries? For well below market value? My brother lives in Florida and does not seem capable of understanding the fair market value of houses in California. I never thought he was stupid, so maybe this was all done out of spite.

I did the only thing I could do: My lawyer told me that we could file a lis pendens on the house, which hopefully would invalidate the previous sale. (I have never personally met the elusive 'buyer', nor has this person even seen the inside of my house.) I have some doubts whether this mysterious 'buyer' is even real. When I asked the Realtor for a copy of the offer, she told me that only my lawyer could get that. And of course my brother refuses to give me ANYTHING.

I went ahead and filed a lawsuit, suing my brother for breach of fiduciary duty. It was very expensive to file this lawsuit, and I can't really afford much more. But it seemed like the ONLY way to get fair market value for my home was to go ahead and file the lawsuit. Also, my brother filed an eviction notice against me, which turned out to be illegal.

I've never dealt with lawyers before or filed a lawsuit against anyone. I almost feel like I'm a bit in over my head, here. People are warning me that lawyers will drag out a case to make maximum profits. People are warning me that going to Court is very expensive (there is a court hearing scheduled for early August). I think some of these people may be trying to get me to drop the lawsuit, because they realize that my brother is at fault. Others are more neutral, and some really don't know much about legal fees, either.

I'm posting here to try to get some impartial opinions or information about Trust litigation. I WISH my lawyer was working pro bono, but he's not. He's expensive, and I'm trying to look at the cost/benefit ratio. It is my understanding that my brother (as Trustee) is allowed to pay all of HIS legal expenses out of the Trust? That scares me even more, because the only asset in the Trust is the house, and I don't want to see all that money go to the lawyers. IF I win the lawsuit, does my brother have to pay for HIS OWN legal costs, or even pay for MY legal costs?

If my brother travels from Florida to California for the hearing, do all of his travel expenses come out of the Trust? My brother currently has THREE lawyers working against me, so I can only imagine how much that is costing.

My lawyer and I are asking 1. That my brother be replaced as Trustee and 2. That I be given time to find a new home before putting my house on the market. And of course I want to make sure I get fair market value on the house, this time. (I really don't want to sell, but I can't afford to 'buy out' this brother).

There is one family friend in particular who is trying to convince me that things can be resolved without lawyers. I don't trust this guy, because in the past he has been on my brother's side. This guy has been trying to convince me to send emails to my brother--even writing out word for word what I should sent him. (I'm afraid this may be some sort of trick, and that these emails MIGHT somehow be used against me in Court. Should I be emailing my brother, at all?). Obviously it's in the Realtor's best interests to convince me to drop the lawsuit, too. She doesn't want to miss out on a commission.

I don't trust my brother AT ALL, so that's why I want things to go through lawyers and be official. I do NOT want my brother to play any more 'dirty tricks' on me. My other brother seems incapable of reining in the elder brother. For the record, my elder brother refuses to speak to me, and has told me that he wants ALL communications to go through our respective lawyers, even though is will be more expensive for me and come out of the Trust. (I think my brother is trying to bankrupt me. He already stole a hefty sum from my mom's IRA).

I'm a bit apprehensive about putting all of my faith and trust (and money) in a lawyer, but I see no other option. Can this mess possibly be resolved without lawyers? I paid a hefty sum to file that lawsuit, so I do want to get my money's worth. When MY money is scarce and the Trustee is so hostile and secretive, it's a really bad combination. But I think I'm doing the right thing by filing the lawsuit.

Are there any questions I should be asking my lawyer about fees, or about how things with the lawsuit will proceed? Even my lawyer told me, "It won't be cheap", but I saw no other alternative than to file the lis pendens. (I already paid a large amount to my lawyer as a 'retainer'). My lawyer and I are currently awaiting a reply from my brother and HIS lawyer, but we are being IGNORED. All along, my brother has basically IGNORED me and my lawyer. I was able to get a copy of the Trust, but that's about it.

Does my brother really get to pay ALL of HIS legal fees out of the Trust? That is really unfair. I suppose I'll ask my lawyer if I should take this to Court, or not, and what the fees will be? Are there any other questions I should be asking my lawyer? In the meantime, my brother is spending all of the Trust money on lawyers. Do all lawyers do mediation? I guess I'd like to try to settle things, before this gets too expensive. I'm feeling a bit unsure about all of this, and wanted to ask for any advice. Thanks in advance.

 

[justalayman]

I've lived in for 20 years is now owned by the Trust. I own 50% and each of my brothers owns 25%.


Make up your mind. If the asset is owned by the trust neither you nor your brother own any share of the asset. The trust owns 100% of the asset.

If your brother was/is trustee, if the rules of the trust allow him to sell the assets of the trust,'lll he can do precisely that.

A lis pendens invalidates nothing. It is simply a formal notice that there is legal action pending or about to be pending. You have to actually file suit or the lis oendends is meaningless. It merely serves
Notice to prospective buyers there is litigation pending or about to be filed.

Your brother cannot pay his personal expenses from the trust although he can pay legal expense of the trustee out of the trust.

If you initiated legal action and have an attorney you should not be sending your brother emails.

 

[Dandy Don]

Selling the house below market value is NOT a breach of fiduciary duty. How much did he sell it for and what is fair market value? The trust receives the proceeds from the sale and so the trust beneficiaries benefit when a distribution is made.

Your attorney appears to have taken this lawsuit just to get paid his legal fees. Can he offer any reasonable explanation (by citing case law) that would explain to you on what basis he would expect to win this suit? No. Save your self further expense and drop the lawsuit and perhaps brother will be sympathetic enough to answer your concerns or be more forthcoming.

You can't prevent any supposed unethical behavior on the part of your brother--you will eventually get an overview of what has happened with this estate when an accounting has been completed and you and your attorney can then review what has happened with this trust. Have your attorney send a written request to ask for an ACCOUNTING of the trust for each year the trust has been in existence, which they are required by law to provide upon request. Ask your attorney if you can ask that a trustee's bond be purchased to protect the beneficiaries financial interest against theft/misappropriation (if the trust does not already specifically exempt purchasing a bond). Do not send emails to your brother.

 

[justalayman]

Depending why the sale was for less than market value it absolutely could be a breach of the trustees fiduciary duty. The trustee is charged with controlling the trust is the best means possible to fulfill the intent of the trust or protect value of the trust or provide the beneficiaries with the best financial benefit possible.

While there can be allowable reasons a property is sold for less than fair market value, absent such reason it is quite likely to be a breach of the trustee's fiduciary obligations.

 

[tranquility]

The trust owns 100% of the asset.

Agreed.

If your brother was/is trustee, if the rules of the trust allow him to sell the assets of the trust,'lll he can do precisely that.

Just because, under the circumstances listed, he "can", does not mean that doing so is not a breach of his fiduciary duty.

A lis pendens invalidates nothing. It is simply a formal notice that there is legal action pending or about to be pending. You have to actually file suit or the lis oendends is meaningless. It merely serves
Notice to prospective buyers there is litigation pending or about to be filed.

Agreed.

Your brother cannot pay his personal expenses from the trust although he can pay legal expense of the trustee out of the trust.

If the trustee has to go to another state to deal with trust issues, it is not a "personal' expense.

If you initiated legal action and have an attorney you should not be sending your brother emails.

Agreed.

 

[Zigner]

Did we really net yet another thread about this topic? (Post Hx)

 

[tranquility]

Selling the house below market value is NOT a breach of fiduciary duty. How much did he sell it for and what is fair market value? The trust receives the proceeds from the sale and so the trust beneficiaries benefit when a distribution is made.

As justalayman wrote, it certainly could be for any of a number of reasons. The main one is WHY did he sell it for less? Unless there was a trust reason for doing so, it seems like a good chance it was a breach. (Although I can imagine any of a number of valid trust reasons.)

Your attorney appears to have taken this lawsuit just to get paid his legal fees. Can he offer any reasonable explanation (by citing case law) that would explain to you on what basis he would expect to win this suit? No. Save your self further expense and drop the lawsuit and perhaps brother will be sympathetic enough to answer your concerns or be more forthcoming.

To make the claim without even seeing the trust and knowing its purpose is ridiculous.

 

[tranquility]

Does my brother really get to pay ALL of HIS legal fees out of the Trust? That is really unfair. I suppose I'll ask my lawyer if I should take this to Court, or not, and what the fees will be? Are there any other questions I should be asking my lawyer? In the meantime, my brother is spending all of the Trust money on lawyers. Do all lawyers do mediation? I guess I'd like to try to settle things, before this gets too expensive. I'm feeling a bit unsure about all of this, and wanted to ask for any advice. Thanks in advance.

They are not "his" legal fees, they are the legal fees of the trustee defending the trust. If he loses, part of the judgment will be to have him reimburse the trust. As to if the case should go on, you have to know the answer to a few questions. (There could be more, of course, but assuming the trust is fairly standard.) WHY did brother sell the house? WHY were you allowed to live in the house without paying rent to the trust? WHAT is the purpose of the trust?

The first is most likely the key one. If he sold it quickly at a discount just to get his distribution sooner, he might have a problem. The second may show the trust giving you some rights specifically within the trust OR give you less to complain about if you are not paying. The final MAY be interesting. If a standard living trust that became irrevocable on the second death, maybe not. If designed to let you stay for a longer time in the house maybe so.

 

[Eva 14]

They are not "his" legal fees, they are the legal fees of the trustee defending the trust. If he loses, part of the judgment will be to have him reimburse the trust. As to if the case should go on, you have to know the answer to a few questions. (There could be more, of course, but assuming the trust is fairly standard.) WHY did brother sell the house? WHY were you allowed to live in the house without paying rent to the trust? WHAT is the purpose of the trust?
____________________________________________________________________________________________
Thanks. To answer your questions: My brother sold the house as quickly as possible simply to be 'done with it' and get his distribution. We also suspect that he purposely sold it for such a low price out of spite, so that I would lose my home AND have less money to live on. Brother sold the house for nearly $500,000 below market value, without putting it on the MLS, without doing open houses, etc. Maybe you can understand why I was upset enough to file a lawsuit. I believe this behavior on my brother's part constitutes breach of fiduciary duty, but I don't claim to be a legal expert.

I have been paying 100% rent on the house. According to the Trust, I am only supposed to be paying 50% (per my share), but I've been stuck paying 100% of ALL expenses (mortgage, property taxes, insurance, maintenance, etc.). This gives me rights against things like the unlawful eviction that my brother attempted to do to me (another spiteful act on his part).

What is the purpose of the trust? I'm not 100% clear about that. It was a revocable living trust that became irrevocable when my mother died. There is also an amendment that deals specifically with me and my welfare. Unfortunately, the trust does not give me the right to live in the house for the rest of my life. So I'm really not sure if it's a 'standard' trust, or something a little bit different.

 

[justalayman]

You don't have open houses to sell a house. You have open houses to get possible client lists.

A home does not have to be on MLS. In fact, unless the real estate agent is a Realtor, the house won't be listed in MLS.

If you were paying the financial obligations required either by law or the terms of the trust, if the trust allowed you to remain in the home he could not evict you without some valid reason.


If the house was sold for a half million below market value, there does need to be some review of that action.

As to the purpose of the trust; read the trust documents.