Quitclaim Deed/Trust

[NIV]

While I don't think the distribution of the house appropriate, it seems as though there will be issues in any litigation. There is going to need to be a careful reading of the trust compared to an accounting to have clue as to where this may have gone wrong.

I'm reading the trust has only a single asset; the property. The property is subject to a life estate as long as the brother is living in the residence. The property has expenses to pay. What is the trustee to do?

That's the problem. No one is going to loan money to the trust as it has no income. How can it pay for property taxes? Even if the brother is responsible for property upkeep and taxes, what if he is not paying?

The resolution is going to be very fact sensitive and based on careful reading of the trust's terms.

 

[LdiJ]

While I don't think the distribution of the house appropriate, it seems as though there will be issues in any litigation. There is going to need to be a careful reading of the trust compared to an accounting to have clue as to where this may have gone wrong.

I'm reading the trust has only a single asset; the property. The property is subject to a life estate as long as the brother is living in the residence. The property has expenses to pay. What is the trustee to do?

That's the problem. No one is going to loan money to the trust as it has no income. How can it pay for property taxes? Even if the brother is responsible for property upkeep and taxes, what if he is not paying?

The resolution is going to be very fact sensitive and based on careful reading of the trust's terms.

Those area all valid questions. However, the answer to those questions is NOT to give away the property to the beneficiary living there, at the expense of the other beneficiaries.

 

[NIV]

Those area all valid questions. However, the answer to those questions is NOT to give away the property to the beneficiary living there, at the expense of the other beneficiaries.

Maybe. Do you have any solution that would keep the trustee from violating the trust's terms?

 

[Zigner]

Maybe. Do you have any solution that would keep the trustee from violating the trust's terms?

That's a trick question. We don't even know the trust's terms.

 

[NIV]

That's a trick question. We don't even know the trust's terms.

I agree. In fact, if the trust is competently prepared rather than filled in forms, I suspect there might be a clause or two that guides just in case a situation like we find ourselves in occurs.

 

[LdiJ]

Maybe. Do you have any solution that would keep the trustee from violating the trust's terms?

Yep, take the beneficiary who is living there to court for not following the conditions of his life estate.

 

[HRZ]

Agree..need to read the trust .....so,far it is unclear if the trust provides for any sort of rental or life right to any specific benificiary or even if the trustee has powers to rent at other than fair market value .

I get it ( been there ) that a small trust can be a bit of a pain to administer ...but selling / transferring an asset for trivial consideration to ones brother sure invites very careful scrutiny .

OP...I'd try to get a fresh handle on current market value of that home ....sometimes estates / trusts try to value things at super low end of scale ....( been there too )

OP keep in mind that if trustee pulled a whopper of a deal to his brother and failed in his duties as trustee he MIGHT be looking at triple damages plus attorney costs out of his own pocket !!

 

[NIV]

Yep, take the beneficiary who is living there to court for not following the conditions of his life estate.

While it might be waste on a deeded life estate for the person in possession to not pay property taxes, many trusts I've seen pay it from the corpus or income. It all depends on the goals of the grantor and the tax treatment desired.

 

[LdiJ]

While it might be waste on a deeded life estate for the person in possession to not pay property taxes, many trusts I've seen pay it from the corpus or income. It all depends on the goals of the grantor and the tax treatment desired.

The OP specifically stated that the beneficiary with the life estate had to pay the taxes and upkeep.

 

[HRZ]

I saw nothing by OP that indicated a true life estate was in place either by prior acts of owner or proper act of trustee or as part of trust itself. WHat OP seemed to say is that occupant was a tenant of the trust and the consideration / rent was to pay the taxes and maintenance. ...but again we are not reading first hand " facts" contained in a rental agreement .
it is not even clear if tenant was in default of his lease terms . ( The duties of a life tenant , if that is truly what the brother is/was are probably covered in some other body of CA law and likely require life tenant to pay taxes and not lay waste to property )

 

[HRZ]

ALso see in California Lawyer The Importance of Distinguishing Between the Right of Occupancy and a Life Estate
Courts have struggled to distinguish the two concepts.
BY ALAN WEINFELD | SEPTEMBER 2015

 

[NIV]

The OP specifically stated that the beneficiary with the life estate had to pay the taxes and upkeep.

He described a situation that can readily be described as a life estate.

One of the beneficiaries lives in the home and pays the taxes and maintenance in exchange. If he ever wants to sell the home, we would each receive our equal share.

If the beneficiary was simply a renter, we don't really have a problem. Evict and distribute to all. If he had the right to be in the house as long as he lived there, would our quasi-life estate have meaning.

Only as a renter could it be said taxes and maintenance was paid "in exchange". Otherwise they are just paid as the possessor's duty.

 

[HRZ]

THis does not per se describe a life estate or even a right of occupancy , OP wrote :

" One of the beneficiaries lives in the home and pays the taxes and maintenance in exchange. If he ever wants to sell the home, we would each receive our equal share."

Details of trust matter a lot..as well as any other docuement reported to be creating a life estate or right of occupancy in CA.

 

[Zigner]

THis does not per se describe a life estate or even a right of occupancy , OP wrote :

" One of the beneficiaries lives in the home and pays the taxes and maintenance in exchange. If he ever wants to sell the home, we would each receive our equal share."

Details of trust matter a lot..as well as any other docuement reported to be creating a life estate or right of occupancy in CA.

Actually, it pretty much DOES describe a life-estate...as shown by the statement " If HE ever moves out or decides to sell the home, per the will and trust, we should all benefit equally from the sale" (emphasis added.)

 

[HRZ]

Let's wait for the actual will or trust wording ....

A more problematic issue( very rough ) is that IF we jump ahead and presume a valid life estate ...and plug in say 56 as tenants age , then that suggests a mere 21% of value rests with trust as remainderman ....and roughly 20% of 700,000 / 7 is a modest $20,000 slice to each benificiary of paper value ....granted I'd still be royally annoyed and then some if trustee bungled my $20,000 value share .