Adding assets to a trust

[SWFL]

Jurisdiction

California

Me and my brother own my deceased parents house and property under a trust set up by our parents. There's a old vehicle, which is not part of the trust, abandoned on the property that will sold for parts. Is it a simple procedure to deposit those funds into the trust's bank account, or is complicated accounting required? The funds will be used to purchase building materials when I do some remodeling work to the house at the end of the year.

If the accounting is an issue, should any special bank account be set up for any reason like taxes? Part of the home is being rented out officially by the trust and those funds go directly into the trust. The vehicle belonged to a tenant who was evicted years ago.

 

[Tax Counsel]

If the trustee for the trust has not done so already, he or she should open a bank account for the trust. The trustee will need to get an Employer Identification Number (EIN) from the IRS to do that. The EIN is the tax number the IRS assigns to every taxpayer other than individuals, regardess of whether there are actually any employees.

Who owns the vehicle now? Was any action ever taken to get the vehicle title transferred to you, your brother, or the trust? Just because a former tenant left it there for years doesn't automatically make it property of the trust or you. There is the matter of getting the title for the car transferred to whomever has the right to the truck now. That might be the trust. Whomever ends up the owner of the car is the person who has the right to sell it. If its the trust, then that solves your problem of getting the money from the sale into the trust bank account.

Is there a reason for keeping the house in the trust?

I suggest you see an estate and trust attorney for advice regarding how to manage the trust and whether the trust ought to remain or if it would be better to dissolve the trust and have the home transferred to you and your brother. The fee paid to the attorney would be a deductible expense for the trust on its tax return.

 

[SWFL]

If the trustee for the trust has not done so already, he or she should open a bank account for the trust. The trustee will need to get an Employer Identification Number (EIN) from the IRS to do that. The EIN is the tax number the IRS assigns to every taxpayer other than individuals, regardess of whether there are actually any employees.

Who owns the vehicle now? Was any action ever taken to get the vehicle title transferred to you, your brother, or the trust? Just because a former tenant left it there for years doesn't automatically make it property of the trust or you. There is the matter of getting the title for the car transferred to whomever has the right to the truck now. That might be the trust. Whomever ends up the owner of the car is the person who has the right to sell it. If its the trust, then that solves your problem of getting the money from the sale into the trust bank account.

Is there a reason for keeping the house in the trust?

I suggest you see an estate and trust attorney for advice regarding how to manage the trust and whether the trust ought to remain or if it would be better to dissolve the trust and have the home transferred to you and your brother. The fee paid to the attorney would be a deductible expense for the trust on its tax return.

According to my brother, the attorney administrating the trust doesn't want to get involved with doing a lien sale to obtain a title for the abandoned vehicle. The vehicle will be sold as parts only, since it was crashed and then abandoned. It will be sold with a bill of sale and with full disclosure.

I would like the trust to be modified, if possible or replaced with a new one. My brother has plans for the property that he can't accomplish. I don't live in CA and don't want to be involved with owning any property in CA. My wish is to sell the property and use the proceeds to buy a more suitable property in a different state and to buy some rental income properties in a different state. I don't wish to force the issue with my brother. I am worried about prop 13, since the property currently has very low property taxes, as it was purchased in 1980.

A rough estimate of what an attorney would charge to do any of that would be great. I assume that to modify the CA trust, if possible, would require a CA licensed attorney. To dissolve the trust would require a CA licensed attorney and to set up a new trust would require a licensed attorney in the new state. Legally avoiding capitol gains taxes via a property exchange would be preferred, if possible.

Thank you

 

[adjusterjack]

A trust becomes irrevocable upon the death of the trust maker. You typically cannot modify it. You have to obey the terms of the trust.

Your brother wants to keep it, you want to sell it, and you don't want to force the issue with your brother.

Classic set up for expensive litigation.

As for the cost of litigation, you can get an estimate from a lawyer and then count on the cost exceeding the estimate.

 

[Foamback]

Are you trying to sell the vehicle to a junkyard, or parting it out on EBay? What kind of vehicle is it?

 

[zddoodah]

Me and my brother own my deceased parents house and property under a trust set up by our parents.

Please elaborate as to exactly what this means.

How is the house titled? Please be specific (but don't use real names). Please start by providing information about the trust. Who created the trust? I'm guessing it was both of your parents. Let's call them John and Mary Smith. I'm also guessing that, when they were alive, they were the trustees. That probably means that, when they were alive, title was something like the following: "John Smith and Mary Smith, as Trustees of the John and Mary Smith Revocable Family Trust." Is that about right?

When did the first of your parents die? When the first one died, did the second one record with the county recorder an affidavit of death of trustee? Same questions about the second to die. Also, who is/are now the trustee(s) of the trust?

Are you and your brother the only beneficiaries of the trust? What does the trust say is supposed to happen upon the death of both of your parents?

In your follow up post, you wrote that there is an "attorney administrating the trust." Logically, that can only mean one of two things: the attorney is the trustee or the attorney represents the trustee(s). Is the attorney the trustee? If not, whom does the attorney represent?

There's a old vehicle, which is not part of the trust, abandoned on the property that will sold for parts.

Did your parents have wills? If so, and assuming that the will of the first to dies said everything would go to the survivor, what did the will of the second to die say was to happen to estate assets? It would be common to have a will that says, in effect, everything not already in the trust goes to the trust (a pour-over will).

Is it a simple procedure to deposit those funds into the trust's bank account, or is complicated accounting required?

The act of depositing money is quite simple. Whether it's appropriate depends on how you answer the questions I asked. Careful records of all financial transactions should be kept, but I wouldn't call that "complicated accounting."

The funds will be used to purchase building materials when I do some remodeling work to the house at the end of the year.

If you're not the trustee, why are you doing remodeling work?

I would like the trust to be modified, if possible or replaced with a new one.

Unless the trust was expressly created to allow modifications after the deaths of your parents, modification isn't going to be possible. Whether a transfer to another trust would be appropriate isn't possible for us to determine.

A trust becomes irrevocable upon the death of the trust maker.

Sometimes that's true; sometimes it isn't. We don't have enough information to know what's the deal with the trust in question.