Beware of Selfish Siblings

Dear Len & Rosie,

My father passed away a year ago. He had a living trust and my brother is the trustee. There are five children surviving. My mother is also deceased. After my dad’s death, my sister, my brother the trustee and I began clearing the house of forty-five years worth of possessions. We took out two dumpsters of garbage, and gave loads and loads of items to the Goodwill. This took us many emotional months to accomplish. Our other two siblings were not interested in helping and when asked if they wanted anything responded by telling us to take whatever we wanted. The valuable items were divided - we got first choice as the other two were not interested - but we did give them a share.

Now my brother the trustee received a certified letter from our oldest sibling stating that she is entitled to an accounting of the distribution of the items. We do not know her motive. She may request some of these items or maybe she wants money. What is our legal obligation to her request? Isn’t the trustee entitled to divide the items as he believes is fair?

Annette

Dear Annette,

The problem with being a trustee is that despite being closely related to the trust beneficiaries, your brother is still a fiduciary. He’s like the person standing behind the counter at the bank. He owes each beneficiary a fiduciary duty, which is equally a duty of competence (don’t mess up) and a duty of loyalty (treat all beneficiaries fairly).

As we have told readers before, a trustee of a trust has as much work to do as the executor of an estate in probate. The advantage of a trust is that your family gets to avoid the built in time delays of probate, as well as the statutory probate fees that are very lucrative for lawyers.

A trust also gives a family the opportunity to cut corners. If everyone gets along, trust administration could be little more than a paperwork drill of paying off debts and taxes and shoveling everything into the names of the beneficiaries. But the decision as to whether or not to take the “quick and dirty” route isn’t one your brother the trustee gets to make. Trust beneficiaries are entitled to an accounting, and if your older sister did not waive an accounting, she’s still entitled to one.

Your brother has a choice. He can either attempt to provide your sister with an accounting, or he can ignore her and hope she’ll go away. Just understand that if she hires a lawyer and petitions the court, there is a very good chance the judge will order a full accounting. Your brother can argue that your sister waived a trust accounting, at least with respect to the personal possessions, but he hasn’t got anything in writing.

People like your sister who are unwilling to pitch in and help the family when there’s an illness or death are the same people who insist on squeezing every last dime out of a trust or estate, no matter how much work others have to do. Both behaviors are an expression of selfishness. The lesson here is that trustees should seek legal help when administering a trust, if only to make sure that they are doing everything correctly and that if they cut corners, they aren’t going to expose themselves to future liability.

Len & Rosie
 

Joint Tenancy with Step-Daughter

Dear Len & Rosie,

After my second wife passed away, I put my step-daughter’s name on the title to our house as joint tenants. I tried to sell the house last year but she would not sign the papers because she said she wanted the whole house. I went to a lawyer, and he didn’t do anything. I went to another lawyer, and still nothing. I have already spent $7,000 on lawyers and I have made no progress.

All I want to do is sell the house and give her one-half of the money I get, but she won’t listen. My step-daughter wants to buy the house from me for only $40,000. If she gets it, she’ll sell the house for a lot more money. I pay all the upkeep on the house, including taxes, insurance, and everything else. She never paid a cent. 

I am 77 years old and she is waiting for my death so she can get everything. She never sees me and has never done anything for me since her mother died, even though she lives only 3 miles away. She is so mad about me because I have a girlfriend who takes good care of me. I want to sell the house, but not to her for what little she wants to pay. I worked too hard for that. Do I have the right to sell the house without her signature?

Domenic

Dear Domenic,

Every once in a while someone asks why we tell people to put their homes into a revocable trust to avoid probate instead of just adding their children to the title of the property. The next time that happens, we will show them your letter. When you gave your step-daughter part of your house, you gave up your exclusive control of it. She is as much an owner of the house as you are, at least according to its title. Because of this, you cannot sell the home without her agreement.

You can sue your step-daughter and ask the court to revoke the joint tenancy deed and return the property to your name. You have a case, as long as she did not pay you for her half of the home, and has never contributed to its maintenance, insurance, and property taxes. Your attorney can argue that you added your step-daughter to the title to the home only to avoid probate, and that you didn’t mean for her to own an interest in the property until after your death. This is not an automatic win, because you have to overcome the legal presumption that the title to the home is correct. This may be what your attorneys have tried to do for you. Unfortunately, it’s not cheap. This may easily cost you more than $7,000 to see it through.

If you’re willing to settle for half and you want to sell the property now, you can sue your step-daughter in an action for partition. The court will order a neutral party to sell the property and divide the proceeds of the sale between the two of you.

If you do not want to sell the property, you can sign a deed that will sever the joint tenancy and change the title of the property to a tenancy in common. Your step-daughter will still own half, but she won’t get your half when you die. Then, you can leave your half of the home to someone else in a will or revocable trust.

The lesson learned here is this: Don’t add a child or step-child to the deed to your home without the full understanding that you can’t just take it back whenever you want.

Len & Rosie