Duties and responsibilities of a trustee

Dear Len & Rosie,

Property was left to my brother and sister and me from our mother in a trust. My mother had signed a trust amendment stating that I should receive an additional $15,000 off of the top for taking care of her. My brother, the trustee, says that he and my sister won’t agree to it, and he’ll leave all of the money in the trust until we all agree. Can he do this? My mother’s home has been sold. The title company says, by law, that since the house was sold, my brother must pay the attorney fees and then divide the rest of the trust amongst the three of us. Can he hold on to the money legally?

Shauna

Dear Shauna,

We hope you are not looking to a title company for legal advice. They do a very good job at what they do, insuring that a home buyer is actually getting what he or she is paying for, but title companies really don’t know anything about trust law except as to how it applies to deeds and title insurance.

One of the great advantages of trusts is that since trusts avoid probate, cooperative families have the opportunity to cut a few corners. As long as the taxes and creditors get paid, the trustee and beneficiaries of a trust can more or less agree to wrap up the trust in a quick and dirty manner, because the trust beneficiaries are the only persons that have any rights with respect to a trust, other than creditors, the IRS, and the California Franchise Tax Board.

Even when beneficiaries don’t get along so well, trusts are usually cheaper and easier to deal with than wills in probate, but trustees have to careful to follow all of the rules. Your brother was supposed to provide you, your sister, any other trust beneficiaries, and certain other persons notice under California Probate Code section 16061.7 within ninety days of your mother’s death. This notice triggers a 120 day countdown on their right to challenge the validity of the trust amendment. If that notice was provided, and if the 120 days are up, then the $15,000 gift is yours legally and your brother and sister may whine about it all they want but they can’t do anything about it. Except stall.

Being a trustee is like standing behind the counter at a bank. It’s not so much a position of power as it is a position of responsibility. If the trust says you get another $15,000, then the trustee has to honor your mother’s wishes and give you the money. If he doesn’t, you could sue him for breaching the fiduciary duty he owes you as a trust beneficiary. You’ll win, assuming your mother didn’t lack capacity when she signed the trust amendment, but you can give up on the idea of cutting corners. Trust administration will be more expensive for everyone.

This puts you in the difficult position of deciding whether or not it’s worth it to take your brother to court. It’s only $15,000 and you would have inherited $5,000 of it anyway. That means you’re arguing over $10,000. While you certainly deserve what your mother intended you to receive, remember that it’s only money, and giving it up may help preserve peace in your family. It’s up to you to decide whether that peace is worth $10,000.

Len & Rosie

Sister feels that she is being punished for “living her own life”

Dear Len & Rosie,

For 24 years I have lived with my mother. I have been her care giver for the past 14 years. I gave up a lot of my life and personal happiness for her. I am not sorry I did this. My sister told me that she did not want to take care of mom, and that I could have the house if I did. She lives in another state and rarely visits.

Mother gave me one-half of the home so that we could borrow against the property. We qualified for the loan on my salary and her equity, and spent almost $100,000 on repairs and improvements. I pay the mortgage payments, taxes and insurance. The home is now worth $400,000.

Now my sister complains that she is being cheated out of her fair share of the home when mom dies. My sister says that she feels that this is cruel and that she is being punished for “living her own life”.

I have tried to explain to my sister that I have paid for the house and cared for mom, and that the house is my retirement investment. She doesn’t accept this, and I know she is going to cause trouble when my mother dies.

Donna

Dear Donna,

It is usually the children who do the least for their parents who put their hands out first and furthest when their parents die. Your sister is selfish now. That’s not going to change when your mother dies.

Your mother has the right to leave her assets to anyone that she wants. Some people think the only fair thing to do is to leave their assets to their children in equal shares. Others believe that they should give a little more to those of their children who have not been as successful in life as the others.

Still others, such as your mother, leave assets to the children who stand by them in their time of need and care for them as they age. Which way is the most fair? All of them. If your mother wants to reward you for caring for her, she may do so. It is her right to do whatever she wishes.

After your mother’s death, your sister may claim that you unduly influenced your mother and conned her into leaving everything to you. She won’t have much of a case if your mother added you to the deed to her home long ago.  If she did it recently, you may have problems as your mother is dependent on your care.

Your mother can best protect your inheritance now by reviewing her estate plan with a trusts and estates attorney, in a private meeting without you in the room. Let the attorney evaluate your mother’s capacity and verify that she really wants to leave everything to you. He or she can make sure your mother’s estate plan is up to date, and the attorney will also be a witness in your favor if your sister tries to sue you after your mother’s death.

Len & Rosie