How do payments on property in a trust work?
June 1, 2014 7:07 PM Subscribe
Father left his stuff to me in a trust. Not sure what that means, and need an answer to the most basic of questions.
Over a year ago my father died and left everything he owned to my sister and me. Included was several properties he still owed on. I was of course a little out of it after his death, but in a meeting with an attorney I could swear I was told that we could continue to make payments for these properties through the trust.
Fast forward to now: there was a problem with a payment for land he owned that is in the trust. It wasn't the correct amount and, after being cashed, I was sent a check for the amount. But it was in my fathers name (I live in his old house).
When I explained the problem, that I can't cash the check because it was my checking account and the check was written to my deceased father, they said no problem. Just to send them a copy of the check and they would write a new one to me. However they added that I also needed to transfer the land to my name.
I haven't written them back yet, and I don't think (obviously) they know about the trust.
You are not my attorney and I will be talking to my attorney later this week. I'm just curious if I should be able to make land payments while keeping the land in the trust. Or, will I need to immediately put the land in my name.
Any info on just the basics of this would be greatly appreciated.
Over a year ago my father died and left everything he owned to my sister and me. Included was several properties he still owed on. I was of course a little out of it after his death, but in a meeting with an attorney I could swear I was told that we could continue to make payments for these properties through the trust.
Fast forward to now: there was a problem with a payment for land he owned that is in the trust. It wasn't the correct amount and, after being cashed, I was sent a check for the amount. But it was in my fathers name (I live in his old house).
When I explained the problem, that I can't cash the check because it was my checking account and the check was written to my deceased father, they said no problem. Just to send them a copy of the check and they would write a new one to me. However they added that I also needed to transfer the land to my name.
I haven't written them back yet, and I don't think (obviously) they know about the trust.
You are not my attorney and I will be talking to my attorney later this week. I'm just curious if I should be able to make land payments while keeping the land in the trust. Or, will I need to immediately put the land in my name.
Any info on just the basics of this would be greatly appreciated.
Best answer: You should have a copy of the trust agreement, and it will probably direct how the assets should be managed. Real estate owned by the trust would normally have its costs (casualty insurance and real estate taxes, at least) paid by the other trust assets, not by you.
If the trust is intended to hold real estate for your benefit, but does not provide the means to pay these ongoing expenses, you will need to make a decision as to whether you can afford to subsidize these costs. You are not required to accept anything that is given to you in the trust, if the cost is too high to accept.
posted by yclipse at 8:08 PM on June 1, 2014
If the trust is intended to hold real estate for your benefit, but does not provide the means to pay these ongoing expenses, you will need to make a decision as to whether you can afford to subsidize these costs. You are not required to accept anything that is given to you in the trust, if the cost is too high to accept.
posted by yclipse at 8:08 PM on June 1, 2014
Best answer: As I understand them, trusts are set up so the deceased will still have some control over how their assets will be used, or to protect the inheritors. Presumably, your father's attorney was also the executor of his estate and likely also one of the trustees. He should be able to tell you how the trust is set up, what the status of the trust (or estate) is and what the intended purpose of the trust was. They probably explained this too you last year but, as you say, your frame of mind was not the best.
In any case, the land probably does not belong to you and/or your sister, but either still belongs to you fathers estate (in which case the executor is still making the payments from the estate) or to the trust (and payments are being made by a trustee from other funds that are part of the trust).
In either case, that check should not be made out to you when it is reissued. If your father's estate has not been finalized, the executor can likely deposit that check and a correct payment could be made. I assume the payment amount may have changed due to a change in escrow such as taxes or insurance increase.
As a side note, although you may not have a say in the how the trust is administered, you should be encouraged to ask questions and have you and your sister updated on the trust's status. Are you and your sister supposed to draw income from these properties now or in the future? Will they affect your taxes at some point? Is the trust indefinite or until you reach a certain age? What happens to the trust assets if you or your sister pass? Who are the trustees and is there a plan if they pass or retire? These are important things to know upfront.
posted by Yorrick at 9:41 PM on June 1, 2014 [2 favorites]
In any case, the land probably does not belong to you and/or your sister, but either still belongs to you fathers estate (in which case the executor is still making the payments from the estate) or to the trust (and payments are being made by a trustee from other funds that are part of the trust).
In either case, that check should not be made out to you when it is reissued. If your father's estate has not been finalized, the executor can likely deposit that check and a correct payment could be made. I assume the payment amount may have changed due to a change in escrow such as taxes or insurance increase.
As a side note, although you may not have a say in the how the trust is administered, you should be encouraged to ask questions and have you and your sister updated on the trust's status. Are you and your sister supposed to draw income from these properties now or in the future? Will they affect your taxes at some point? Is the trust indefinite or until you reach a certain age? What happens to the trust assets if you or your sister pass? Who are the trustees and is there a plan if they pass or retire? These are important things to know upfront.
posted by Yorrick at 9:41 PM on June 1, 2014 [2 favorites]
Who is named as the trustee? This person would have control over the assets in the trust.
posted by Thorzdad at 5:14 AM on June 2, 2014
posted by Thorzdad at 5:14 AM on June 2, 2014
Response by poster: Thanks for the answers everyone. I at least have a better handle on what I'm dealing with now.
posted by ratherbethedevil at 8:27 PM on October 26, 2014
posted by ratherbethedevil at 8:27 PM on October 26, 2014
This thread is closed to new comments.
What it sounds like is that there is property AND money for the property in the trust. This is not unusual. So much depends on what the rules of the trust are, and what is IN the trust, that you basically need to talk to whoever is the trustee and they can lay it out for you. Trusts are often created so that stuff can pass from a person to the people they choose without getting tied up in probate. It can also (because of this) be more secret since wills are public documents. But they can be murky and unclear also, so I'd make sure you know what's what.
Property stuff is weird. I am in the process of closing out an estate that involves a house. The rules concerning that are very state-to-state based (if you are even in the US) but in my instance we just kept making payments on the property that wasn't in our name (yet) and the bank was okay with that. Some banks are not and will basically call a mortgage due or require you to put everything in your name. It's smarter to eventually have things in your name just because if you die and have to pass on your share pf the trust somehow, there's a bit of a hassle on that end transferring stuff that is legally yours but that isn't reflected in the paperwork.
I'd suggest you figure out who the trustee of this trust is, contact them, get a copy of the trust documents and talk it over with a lawyer. I'm not sure I even understand the money thing you are explaining (you wrote a check and it was wrong? Someone else wrote a check but it came back to you? what exactly happened?) but there should be a clear path through.
posted by jessamyn at 7:46 PM on June 1, 2014