1% owner, 99% Trust: ben. trustees can't be located

[LTD93]

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

My mother is in an interesting situation, and I’m hoping you can shed some light on this for me.

She is 1% owner in a home, and a Trust is 99% owner. (Tenants in common) The grantor/trustee passed, the successor trustee passed several years ago, the beneficiary trustees cannot be located by the insurance companies or the banks that hold other Trust assets. My mom is not named in the trust and is not related to those who are. She was gifted the 1% share in the home by the successor Trustee in 2005. She has a friend that was helping her with bills, etc. who decided that the Trust should pay property taxes, and my mom shouldn’t. My understanding is that the friend is incorrect, and as a tenant-in-common, my mom is liable for the taxes in full if the other owner doesn’t pay. There is currently a lien on the home. I am working on freeing enough funds for my mom to pay on the back taxes, however I have a lot of questions and a lot of worries.

My questions are regarding the disposition of the home with 99% phantom owners.

A.) Notice was received at my mom’s home in December that because the beneficiaries cannot be located, the insurance and bank funds are going to the state. If the Trust assets (insurance, brokerage accounts, cash) are going to the state, what will be the status of the 99% share of the home?

B.) Is there any way in which my mom recover anything from the Trust to reimburse her for their share of the taxes and/or maintenance?

C.) What will happen when she needs to move to a retirement home: Can she sell her 1%? Will that buyer then have the same rights to remain in the home that she has now?

D.) Can the state force her to sell her 1% in light of the non-payment of property tax?

Everything seems to be ok right now, but ideally I’d like to be able to recover tax/maintenance funds for my mom, and I want to be prepared for the future when she will need to go into an assisted living situation.

 

[LdiJ]

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

My mother is in an interesting situation, and I’m hoping you can shed some light on this for me.

She is 1% owner in a home, and a Trust is 99% owner. (Tenants in common) The grantor/trustee passed, the successor trustee passed several years ago, the beneficiary trustees cannot be located by the insurance companies or the banks that hold other Trust assets. My mom is not named in the trust and is not related to those who are. She was gifted the 1% share in the home by the successor Trustee in 2005. She has a friend that was helping her with bills, etc. who decided that the Trust should pay property taxes, and my mom shouldn’t. My understanding is that the friend is incorrect, and as a tenant-in-common, my mom is liable for the taxes in full if the other owner doesn’t pay. There is currently a lien on the home. I am working on freeing enough funds for my mom to pay on the back taxes, however I have a lot of questions and a lot of worries.

My questions are regarding the disposition of the home with 99% phantom owners.

A.) Notice was received at my mom’s home in December that because the beneficiaries cannot be located, the insurance and bank funds are going to the state. If the Trust assets (insurance, brokerage accounts, cash) are going to the state, what will be the status of the 99% share of the home?

B.) Is there any way in which my mom recover anything from the Trust to reimburse her for their share of the taxes and/or maintenance?

C.) What will happen when she needs to move to a retirement home: Can she sell her 1%? Will that buyer then have the same rights to remain in the home that she has now?

D.) Can the state force her to sell her 1% in light of the non-payment of property tax?

Everything seems to be ok right now, but ideally I’d like to be able to recover tax/maintenance funds for my mom, and I want to be prepared for the future when she will need to go into an assisted living situation.

Have you applied to the trustees of the trust to pay the trust's share of the property taxes?

By the way, there is no such thing as a beneficiary trustee. A beneficiary is the person who is to receive the money from the trust. The Trustee is the person or persons who manage the trust. A beneficiary can also be a trustee, but that is not so much the norm. If your mom was not a beneficiary of the trust, then its very unusual that the trustee (at the time) gifted her any portion of the house, and may be highly improper. However again, since you seem to be uncertain of your wording that might change things.

So, is it the beneficiaries that cannot be located or the trustees, or both?

 

[HRZ]

Very hard to follow your post....and at least on surface a 1% owner would be unwise to pay to protect the interests of the 99% ....

States are pretty quick to grab by escheating ...been there...pain to unwind .

Mom needs a lot more homework /help

 

[LTD93]

Corrections

Very hard to follow your post....and at least on surface a 1% owner would be unwise to pay to protect the interests of the 99% ....

States are pretty quick to grab by escheating ...been there...pain to unwind .

Mom needs a lot more homework /help

Sorry for being unclear, and thank you for pointing it out - I was trying to provide info you might need to work it out, and missed the mark for sure.

Living Trust = "Jones" Family Trust

Trustor/Trustee = Mr. Jones

Successor Trustee = Mrs. Jones ---> gave my mom 1% ownership to the home, nothing else.

3 other successor trustees = cousins/in-laws of the same generation as Mr/Mrs. Jones -----> also named as beneficiaries of the life insurance (thus the mistaken term in my op. sorry!) These are the successors that cannot be located.

As far as I know, a trustee of a living trust can dispose of assets as they wish, unless it's specifically barred. There is standard language in the Jones family trust: "...specific powers to grant, bargain, sell, convey, grant options, exchange or convert any real or personal property." I'm not worried about that part. Should I be, thought?

So you think she shouldn't pay the taxes? or should?

I'm more confused now. What other information should I try to find before I take this to an estate (?) real estate (?) attorney?

 

[LTD93]

Have you applied to the trustees of the trust to pay the trust's share of the property taxes?

By the way, there is no such thing as a beneficiary trustee. A beneficiary is the person who is to receive the money from the trust. The Trustee is the person or persons who manage the trust. A beneficiary can also be a trustee, but that is not so much the norm. If your mom was not a beneficiary of the trust, then its very unusual that the trustee (at the time) gifted her any portion of the house, and may be highly improper. However again, since you seem to be uncertain of your wording that might change things.

So, is it the beneficiaries that cannot be located or the trustees, or both?

There are no trustees in any practical sense. The named successor trustees cannot be located. See my post above regarding terminology corrections. And thanks!

 

[LdiJ]

Sorry for being unclear, and thank you for pointing it out - I was trying to provide info you might need to work it out, and missed the mark for sure.

Living Trust = "Jones" Family Trust

Trustor/Trustee = Mr. Jones

Successor Trustee = Mrs. Jones ---> gave my mom 1% ownership to the home, nothing else.

3 other successor trustees = cousins/in-laws of the same generation as Mr/Mrs. Jones -----> also named as beneficiaries of the life insurance (thus the mistaken term in my op. sorry!) These are the successors that cannot be located.

As far as I know, a trustee of a living trust can dispose of assets as they wish, unless it's specifically barred. There is standard language in the Jones family trust: "...specific powers to grant, bargain, sell, convey, grant options, exchange or convert any real or personal property." I'm not worried about that part. Should I be, thought?


So you think she shouldn't pay the taxes? or should?

I'm more confused now. What other information should I try to find before I take this to an estate (?) real estate (?) attorney?

Ok, that changes things. Since its a living trust, and was also a living trust for the successor trustee (I assume) then yes, she could give away a share of the house because it remained her property until she actually passed away.

If the cousins are named as beneficiaries of the life insurance are they also named as beneficiaries of the trust?...or just as trustees? If they are not beneficiaries of the trust, then who is?

Its possible that the cousins/in laws passed away before Mr. and Mrs. Jones if they cannot be found.

She probably is going to need to pay the taxes if she does not want to lose the house. The trust has no trustees to manage it.

 

[HRZ]

Does Mom hold a recorded deed for her interest?

Way beyond my lay skills...but assume $350/hr for an attorney to run a scavenger hunt..I'd have Mom gather copies of trust and anything Bank will share . Seems odd that home is not distributed .

( One of my friends wound up with a big property as last person standing due to odd deed construction ...)

Was Mom a long term helper or what ?

 

[HRZ]

CA has to own rules about tax redemption ...study up . ..I have no direct knowledge as the how your rules work ..I do know in some situations other places a fractional,share owner can improve his/her lot by paying the taxes ..
But I'd sure fact check CA first.

 

[LTD93]

Does Mom hold a recorded deed for her interest?

Way beyond my lay skills...but assume $350/hr for an attorney to run a scavenger hunt..I'd have Mom gather copies of trust and anything Bank will share . Seems odd that home is not distributed .

( One of my friends wound up with a big property as last person standing due to odd deed construction ...)

Was Mom a long term helper or what ?

There is a Trustee's Deed of Distribution recorded with the county. I have a copy of the deed and the trust with amendments. The bank won't share anything with us (as is proper. Frustrating, but proper.) Bank statements and 1099R's are mailed to the home still but aren't helpful. Mom was a friend first, live-in helper when (mom's) husband passed.

Ldij: the named beneficiaries of the life insurance are the same as the named successor trustees.

Basically, I believe the insurance co / bank when they say that the successor trustees can't be located, and that they are giving the assets to the state. So now what is the status of 99% of the home? Who owns it and can we recover money for taxes / maintenance?

 

[LTD93]

CA has to own rules about tax redemption ...study up . ..I have no direct knowledge as the how your rules work ..I do know in some situations other places a fractional,share owner can improve his/her lot by paying the taxes ..
But I'd sure fact check CA first.

I'll look into it. I hate tax stuff, but I'll just have to deal with it.

 

[LdiJ]

There is a Trustee's Deed of Distribution recorded with the county. I have a copy of the deed and the trust with amendments. The bank won't share anything with us (as is proper. Frustrating, but proper.) Bank statements and 1099R's are mailed to the home still but aren't helpful. Mom was a friend first, live-in helper when (mom's) husband passed.

Ldij: the named beneficiaries of the life insurance are the same as the named successor trustees.

Basically, I believe the insurance co / bank when they say that the successor trustees can't be located, and that they are giving the assets to the state. So now what is the status of 99% of the home? Who owns it and can we recover money for taxes / maintenance?

The life insurance would not be part of the trust, because the live insurance has direct beneficiaries, so it would pass outside of the trust.

As far as the house is concerned, as long as an owner is living there, maintaining the home and paying the taxes, nothing further would happen with the house. Has your mother gone through her friend's stuff to see if she can find any addresses or contact information for the cousins/inlaws?

 

[FlyingRon]

Ok, that changes things. Since its a living trust, and was also a living trust for the successor trustee (I assume) then yes, she could give away a share of the house because it remained her property until she actually passed away.

Say what? A living trust does not become a living trust of the successor trustee. That makes absolutely no sense at all.
But that is 100% irrelevant with whether trust assets can be transferred. The transferral can be done if the trust provides for that transfer.

Since even with clarification there is lots of information missing about this, and even what has been presented is of dubious reliablity, my suggestion is that if she wants to protect her imagined interest in the property, she should gather up all the documentation she can find and contact an attorney to review it.

 

[LdiJ]

There is a Trustee's Deed of Distribution recorded with the county. I have a copy of the deed and the trust with amendments. The bank won't share anything with us (as is proper. Frustrating, but proper.) Bank statements and 1099R's are mailed to the home still but aren't helpful. Mom was a friend first, live-in helper when (mom's) husband passed.

Ldij: the named beneficiaries of the life insurance are the same as the named successor trustees.

Basically, I believe the insurance co / bank when they say that the successor trustees can't be located, and that they are giving the assets to the state. So now what is the status of 99% of the home? Who owns it and can we recover money for taxes / maintenance?

Re the bolded. A trust beneficiary and a trustee are two separate things as I have told you before. I also told you that its possible for someone to be both a trustee AND a beneficiary, but its not that common. I need you to clarify now, and for all future posts if the are both successor trustees AND beneficiaries (of the trust, the fact that they are beneficiaries of the life insurance is already established) or just trustees.

Life insurance is completely separate from the trust, it has nothing to do with the trust. Please forget about the life insurance entirely because it has nothing to do with your mother and never will have. Speak about the trust only.

 

[Zigner]

...its possible for someone to be both a trustee AND a beneficiary, but its not that common.

Huh? I would venture to guess that a great number of small-ish family trusts are structured so that one (or more) of the beneficiaries are also trustees. Certainly enough to not call it "uncommon" and, probably enough to even call it "common".

 

[Zigner]

... the named beneficiaries of the life insurance are the same as the named successor trustees.

How in the world do you know that?