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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 37386
Experience:  16 yrs estate law, real estate. Wills/Trusts/Probate
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In 2007 I sold my mothers home for $340,000 secondary to her

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In 2007 I sold my mother's home for $340,000 secondary to her entry into assisted living due to the start of dementia. There was a trust in place established by my father to administer most of her financial assets. The home was not in the trust and in the will it was to be given to me as the only child. She gave me the funds from the sale of the home, but then after the trust representative talked to her, she asked me to return the funds, which I did. She told me that the funds would be given to me at her death and the trust representative deposited the funds into the trust account.

My mother died in December 2012 and I have not been given the $340,000. Am I legally entitled to receive the $340,000 now? The money has not been kept in a separate account, but appears to have been merged in with the overall trust assets of farm land, cash, and the securities. Is this correct and standard trust practice?

Also, the value of the real estate, i.e. farm land, in the trust (about 50% of the overall trust) suddenly dropped in value by 65% after an appraisal was done. I was told by the trust that they had been using the tax values on the real estate, but now since the land was being liquidated, the market values from the appraisal were the values. Is this a standard trust practice to use tax values in lieu of market values to determine the value of the trust and the switch to the market values when the property is sold?

Before the January 2013 appraisal the trust was valued at $4.6 million using the real estate tax values. Now, its valued at $2.4 million using the market value of the January 2013 real estate appraisal. Shouldn't the trustee done a better job here of showing the most accurate "true" value? I feel misled and misinformed after reviewing those trust reports for the past 6 years. Anything that i can do about it?
Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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I have a few questions before I can comment..
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Were you named as a beneficiary of the trust?
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Do you have a copy of the trust or know the trustee so you can request a copy?
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When the trust was initially set up and the property transferred in, was an appraisal performed to determine an accurate value?
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Do you know if your mother or father requested an appraisal of the property when it was transferred into the trust?
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Thanks
Barrister
Customer: replied 3 years ago.

  • Yes, I am the only beneficiary of the trust.

  • Yes, I have a copy of the trust.

  • I do not know if there was an appriasal done at the start of the trust which was16 yrs ago. My father died in 1996 and the trust started in 1997.

  • I doubt that my mother knew enought to ask about an appraisal; she had a 'hands off' type of attitude. I can ask the real estate trust specialist to see when and if there was ever one done before January 2013.


 


Thank-you,


 


Carlton

Ok, thank you for that information.
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Am I legally entitled to receive the $340,000 now?
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This would depend on the terms of the trust and when it was to terminate and disburse the assets in it. When you returned the money to the trust, it would then be subject to whatever the trust states about disbursing assets. If the trust states you are to receive the assets in the trust when your mother passed, then the trustee would have a legal duty to disburse the funds according to the trust directives.
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The money has not been kept in a separate account, but appears to have been merged in with the overall trust assets of farm land, cash, and the securities. Is this correct and standard trust practice?
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Yes, unless the trust dictated otherwise, typically all cash assets are kept in one account for purposes of paying bills and disbursing funds according to the trust terms. For simplicities sake, most trusts just have one cash account to hold all liquid funds.
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Is this a standard trust practice to use tax values in lieu of market values to determine the value of the trust and the switch to the market values when the property is sold?
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Yes, unless the grantor (maker) of the trust directed the trustee to have an appraisal performed when the property was deeded into the trust, it is appropriate to use taxable values. Typically taxable values are actually lower than market values because in a normal real estate market, the property appreciates faster than the taxable values.
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Shouldn't the trustee done a better job here of showing the most accurate "true" value? I feel misled and misinformed after reviewing those trust reports for the past 6 years. Anything that i can do about it?
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The trustee is just the agent of the trust and the grantor so unless they were directed to have an appraisal done, there is not any type of fiduciary duty for the trustee to have appraisals done unless the trust itself mandates it. The trustee actually couldn't spend trust money on an appraisal unless directed to do so by the grantor or the trust as he doesn't have any powers that aren't specifically granted. As I mentioned, most times taxable values are less than market values and when the grantor passes and the trustee distributes assets, the beneficiary takes the property at a normally "stepped up value". But in cases where property values have gone down, the reverse is the case.
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Unfortunately, due to the real estate crash, many portfolios have suffered dramatic reductions in value due to no fault of the managers or trustees so there is not any legal recourse against the trustee for overall market conditions.
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Thanks
Barrister
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