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Any experience with handling a Trust ???
Old 02-06-2011, 09:33 AM   #1
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Any experience with handling a Trust ???

Wondering if anyone out there has experience with a Trust gone wrong? I'm in a really nasty situation and am trying to get out of it.

My mother had a Will stipulating that her house and some money go into a Trust for the benefit of my 2 disabled brothers. Although their disabilities are not really all that disabling... unless laziness and stupidity are now deemed disabilities. Anyway, on her deathbed, she instead signed a quit claim deed and gave the house to them along with her money. How I wish I just left this alone, but, I tried to reverse it (long story but I did this for the benefit of my brothers and my sisters who were to inheirit the house upon my brothers' death) and sought the help of a lawyer. Turns out the quit claim deed was never filed so we did move the house into Trust and my brother agreed to return the money. But, in the end, he didn't. Instead, my brother took responsibility for paying the bills related to the house. Fast forward 6 years, the taxes are past due, the HOA is suing me and I'm paying the homeowner's insurance.

Over the years, I've tried everything I can think of. The house could be sold but they don't want to move, and I can't sell it if they won't let realtors in. If evicted, they would truly be homeless and blame me. I tried to recover some of the money my brother "gave" to someone (50K) but that's not going well either. I also tried a home equity loan (denied because it's in the name of a trust) and I tried to convince my older brother to help me get a reverse mortgage in his name (he will be 62 this month and this solution would allow them to stay in the home, pay the bills, and have some extra money). He won't even respond to me. I've considered getting a conservatorship and proceeding with the reverse mortgage but all this would be at my expense and my lawyer really doesn't want to go that route. He's still chasing the $50K.

My thought now is to sign the house over to them and let them sink or swim. Of course, I would offer to help them get a home equity loan. My problem is this, another lawyer told me if I did that and then they lost the house, I could be held responsible. They could sue me for the value of the house. I'm thinking that my mother's final wish obviously was to sign it over to them anyway so she negated the Will. I shouldn't have set up the Trust in the first place. My lawyer has been witness to everything my brother agreed to do and knows everything I've tried to do. Does anyone see a way out of this for me? I really can't afford to pay their way in life and my sister's don't want anything to do with it although they both have given up any hope of an inheritance. Thoughts anyone?
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Old 02-06-2011, 12:56 PM   #2
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Sorry, no experience, but I am interested.

Do I have this correct?

The assets of the trust are a house and a $50,000 IOU that may not be any good. The debt may be further clouded by the fact that the loan was made by the beneficiary, not the trust.

There are, effectively, no liquid assets in the trust.

The liabilities include overdue taxes and HOA dues. Insurance would be overdue, too, if you were not paying it out of your pocket. These expenses will continue to grow as long as the trust owns the house.

Applying the common-sense definition, the trust is insolvent.

Stretching that statement a bit further, it looks like a court-sanctioned "bankruptcy" is in order. I assume the court could dissolve the trust and distribute the assets and liabilities. Or it could order you and the beneficiaries to take the steps necessary to restructure the trust, such as the reverse mortgage or HELOC you suggest.

I can see lawyer #2's point. Signing over the house to bypass the protection of a court-approved restructuring might come back to bite you.
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Old 02-06-2011, 01:13 PM   #3
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I would stay away from helping your siblings at all. I would stop paying any bills for them. I'm confused as to why you're being sued by the HOA, how is this trust titled? You should probably seek legal advice as to protecting yourself from any legal suits against you vs. concerning yourself with your siblings. In their eyes, you seem to be the perfect scapegoat for them...they want you to pay the bills and if you don't they want to screw you after the fact.
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Old 02-06-2011, 03:12 PM   #4
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Thanks for responding. The only asset in the Trust is the house, no money ever made it into the Trust. And it is titled as "The xxx Family Trust" with me as the grantor, which makes me the responsible one and is why the HOA is after me. The 50K was gifted to someone by my brother once he got control of the money so technically, it isn't a loan and that's why it's so hard to get it back.

The Trust isn't considered insolvent in the eyes of the law because the house has value. I've tried in the past to get out of being the Trustee but my lawyer says I can't unless someone else takes it on. No one will.

I think I just need to get past the court proceeding this week with the HOA and then pursue a separate court action to either disolve the Trust (which they problably won't do) or pursue the conservatorship to get the reverse mortgage. It's just so costly and time consuming. I'm going to be retiring in less than 60 days, I just don't want this hanging on any longer. Seven years has been long enough.
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Old 02-06-2011, 03:34 PM   #5
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Wow, seven years. Sorry for your troubles.
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Old 02-06-2011, 03:43 PM   #6
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Whatever you do, go get the court's blessing.

A good lawyer will lay out the options for you. I'd ask your lawyer to do that asap.

No more lawyer stuff, no more political stuff, so no more CYA

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Old 02-06-2011, 04:06 PM   #7
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Good advice, I agree that the court needs to bless whatever I do. I think if I laid it all out, explained it all in detail, talked about everything I've tried to do, they will either release me from responsibility altoghter or give me a specific direction. I think my lawyer is trying to help heal a family torn apart more than anything and frankly, it's just not working. I'll probably post an update after the proceeds this week. Thanks everyone for listening.
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Old 02-06-2011, 04:10 PM   #8
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Originally Posted by Martha View Post
Whatever you do, go get the court's blessing.

A good lawyer will lay out the options for you. I'd ask your lawyer to do that asap.

I see Martha, despite her knowledge, isn't even dipping her toe in this one, .

Being clueless, I am going to do the same.

Good luck, and I would appreciate if you kept us informed, since I can forsee a similar thing happening to my cousin in the future.
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Old 02-06-2011, 05:25 PM   #9
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This won't help wishing4it but here is what my parents did to prevent that happening to their trust:

the trust documents state that all of it's assets be used to provide for the daily needs of the Trustors, that any removal of an asset from the trust in excess of that requires the signature of both Trustors or a Trustor and a reserve Trustee. No one could induce either of my parents to give them anything. There is no perfect protection but it prevented some potentially financially devastating actions by one of my parents who became senile.
Duck bjorn.
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Old 02-06-2011, 06:19 PM   #10
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I have trusts and had a guardianship but so far everything has gone according to plan. So it has all just been paperwork so far.
I would consult with good attorney. It sounds like too many things have been going wrong for far too long.
Recently, I was advised not to put my home in the trust I created.
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