Living Trust Question

[juankehoe]

What is the name of your state? Florida
Question: I have a Revocable Family Trust. After I die, My son (who is sub trustee) will become trustee. Lets say he wishes to live in my family home (which is in the trust). What would be the consequences. I have heard that he must pay a fair market rental. If so, that sounds wierd because it would bring up the question...WHO WOULD HE PAY RENT TO (THE TRUST), WHERE DOES HE GET HIS MONEY...FROM THE TRUST. So it would appear to me that it would be a "vicious Circle" since he would be paying rent to the trust, and at the same time getting money to pay rent from the trust.

What is the law concerning such a situation (The trust is mostly for his benefit and the instructions for the trust is that he use the assets of the trust until they are depleated)
Thank You....Ron S.What is the name of your state? FLORIDA

 

[StuckOnStupid]

What is the name of your state? Florida
Question: I have a Revocable Family Trust. After I die, My son (who is sub trustee) will become trustee. Lets say he wishes to live in my family home (which is in the trust). What would be the consequences. I have heard that he must pay a fair market rental. If so, that sounds wierd because it would bring up the question...WHO WOULD HE PAY RENT TO (THE TRUST), WHERE DOES HE GET HIS MONEY...FROM THE TRUST. So it would appear to me that it would be a "vicious Circle" since he would be paying rent to the trust, and at the same time getting money to pay rent from the trust.

What is the law concerning such a situation (The trust is mostly for his benefit and the instructions for the trust is that he use the assets of the trust until they are depleated)
Thank You....Ron S.What is the name of your state? FLORIDA

Ron S., You have a little bit of a misunderstanding.

First the primary purpose of the trust is to avoid Probate Court. A Revocable Trust is nothing more than a private asset distribution instrument.

If your son is the Successor Trustee AND basically the only beneficiary, when you die as trustee he will take over as the Successor Trustee and will then have "legally title" to all property in the name of the Trust.

He can now do as pleases with the trust assets that were designated for him as beneficiary and distribute the balance of the trust assets to the other beneficiaries pursuant the terms of the trust document.

Regarding the house, this depends on who the other beneficiaries are in your trust and their representative share. If son is to get 100% then of course there is no one to pay rent to or to buy out their percentage. If Son was 75% beneficairy and some other person was 25% beneficiary of this type of asset, then he either buys out their 25% interest or pays fair market rent to them for 25% of what the fair market rent would be for the house until sold and the proceeds then distributed.

Based on your statement: "WHO WOULD HE PAY RENT TO"? I'm guessing you have him as a 100% beneficiary and perhaps have made only monetary gifts to certain other individuals to be paid out of the proceeds of the trust estate.

Just to be clear regarding this rent thing.....He would be paying rent to the other TRUST BENEFICIARIES until the asset is sold and they recieved their distribution of their share of that trust asset.

 

[tranquility]

It is impossible to tell without reading the trust. If your son becomes the successor trustee and the sole income and corpus beneficiary on your death (or any time thereafter due to payments to other bendficiaries), title "merges" and the trust disappears.

 

[Dandy Don]

YOU get to decide on his behalf, depending on what you want to do with the home. Eventually sell it, let the trust own it, give him a lifetime estate to have the right to live there for the rest of his life to pay rent or rent-free, or require that he rent it out to someone else. Please make sure you have an attorney's assistance to draft your trust to make sure the terminology is accurate and unambiguous and not confusing and completely clear regarding your intentions.

 

[juankehoe]

Trust Question

Thanks Folks:
All three replies are very helpful. FYI, my trust indeed was drawn up by a trust lawyer at a cost of $1600 (just to show I'm not trying to cut corners). In my case I have made actually both my (2) sons to be equal trustees. The attorney was hesitant about that, but I cannot choose between my 2 sons...THEY ARE BOTH EQUAL AND IT IS BEYOND IMAGINATION TO IMAGINE THEM EVER FIGHTING BECAUSE EACH WOULD RATHER SEE THE OTHER TAKEN CARE OF. Your info was especially helpful, and as the one gentleman stated, "I am sure I am a little confused by the complicated legal system we have". I think what I was confusing is a tax law which insures that anything you receive, as "In kind" value must somehow be claimed as income. I would appreciate even more details if someone can recommend something I can read on the subject. It is my intention that my two sons share a modest inheritance (high six figures) and as I see it, "IT PROVIDES SOME ADDITIONAL CHECK-N-BALANCE, FRAMEWORK SINCE THEY BOTH HAVE TO SIGN (AGREE) ON TRUST MANAGEMENT. Again, Special thanks for the excellent information you have provided..Juankehoe

 

[BlondiePB]

You can read FL Statutes about Estates and Trusts by cutting & pasting the following www.flsenate.gov/statutes.

 

[juankehoe]

Trust Question (Tranquility)

Thanks for your reply but it prompts another question. You say "The title merges and the Trust disappears. Being a diplomat, not an attorney, I am assuming that (put another way) we might say that "When all the provisions of the trust have been completed, the trust disappears because there is nothing left to be accomplished with the trust. Am I right here?
Actually, I simplified my original question because I have 2 sons who will share everything equally, including both of them being named as "sub-trustees". My desire would be (while leaving most decisions up to them) that the trust continue for many years, e.g. "that the home remain the property of the trust, and since the lions share of the trust will be investment securities and cash.(THE TRUST SHOULD GENERATE CONSIDERABLE INCOME). Stated differently, my intentions are that the trust continue indefinitely, that they use it as they wish, taking money out as needed (while the trust continues to generate income). Thanks for your advise/Ron

PS Blondie...tks for the website

 

[curb1]

juankehoe,

Why not distribute the assets after your death in an equal manner between your two sons? This would be the easiest for them. There is no reason (that I can think of) to keep the assets inside a trust.

 

[losman]

Trust Question

CA
As a beneficiary of a Living Trust I can tell you it is no picnic. I am 50% beneficiary of the property with my brother. He passed away before our mother. His 50% passed to his son. Age 12.
I either have to buy him out or the property has to be sold. My brother was Trustee with his wife as Successor Trustee. Our mother also left all cash assets to her 3 grandchildren. A good sum.
Mom told me it was for college. My daughter is now in college and has no access to any funds.

The attorney my sister in law has, will not allow any money to be distributed until the property is sold and all monies can be distributed at one time.

I am sure my mother had no ideal this is what would happen. That I would have to go into dept to pay for my daughters college when she left her the money to pay for it.

Or that I would have to sell my family property, to settle the Trust.

At the time of her death anything in the house was part of the Trust. And would have to be divided as such. She gave me many things prior to her passing to avoid this. If you have items that you want each son to have, put their name on that item. Even the best relationships can change when a parent is not there to referee.

Been there, oh yeah... I still am with no end it site.

 

[curb1]

losman,
That is a good reason why "juankehoe" should not keep the trust going on and on. It should be settled at the very earliest convenience. "juankehoe" is just asking for trouble for her children. Good comment.

 

[tranquility]

No. From Nolo press definitions:

"Under a trust, the situation that occurs when the sole trustee and the sole beneficiary are the same person or institution. Then, there's no longer the separation between the trustee's legal ownership of trust property from the beneficiary's interest. The trust "merges" and ceases to exist. "

It doesn't matter if the trust still has conditions or distributions left to do.