Does this Trust still exist?

[elainejosh]

My mother past away 6 years ago and appointed my sister as Trustee. It turns out that there was a clause that there be a "mandatory distribution" of her properties 5 years after her death. My sister was aware of this but "figured since noone brought it up, she would just stay on" - we just all became aware of this recently. The trust is made up mostly of 2 properties (a 4-plex and a 6-plex) that the Trust co-owns with my uncle. So as of now, Uncle Jack owns 50%, and we (2 brothers, me and my sister) own the other half as a Trust. My sister is in debt, so she now has decided that "mandatory distribution" means we have to sell or be bought out. Besides the fact that my uncle owns 50% of the properties and has for over 30 years so he certainly doesn't want to sell now (taxes etc.) - the rest of us also don't want to sell right now as property values are at an all-time low etc. My sister also decided to take the Trust's rental income (she usually receives a monthly check form Jack, who manages the property, and then splits it out between us quarterly) and pay off some of her debt - about 13 thousand before taxes. So the questions are - is she still legally the Trustee? If she hires lawyers to try to sell the property, are the rest of us responsible for those fees too? (she says she's charging the Trust). Can she force a sale? A partition? If a partition, do we have to sell? Thanks - and sorry this is so long.

 

[dee_dub]

She's still legally the trustee.

If she hires lawyers to assist her in her capacity as trustee, she is entitled to be reimbursed out of the trust. (You might be able to argue that the legal assistance was not necessary or the bill was not justifiable.)

As trustee it is not up to her to force a partition and sale, but as a joint tenant, she has the right to petition the court for such an order.

If you don't like what she's doing as trustee (using rental income to pay off her personal debt) you have the right to petition to have her removed.

 

[elainejosh]

Thank you for your answer, even if it wasn't what I'd hoped ...so is this a petition form that I can get ahold of and file myself? Do all the other siblings have to be on it? Also, if my uncle starts distributing the rent checks to us individually is he liable for anything? (Don't want him to get in trouble - he's such a sweet man and doesn't deserve all this B.S.) Assuming she is paying out of pocket for lawyers and/or realtors since she cleaned out Trust fund (but kept it open) - how would she get the money from the rest of us anyhow? Sue us? - Thank you for your time...

 

[dee_dub]

You can do it yourself but I suggest you get a lawyer. I doubt the petition is something you "get ahold of" and file - more likely you draft it. Talk to your court clerk or a lawyer.

Not all of the other siblings have to be in on it but it would be best if you could get all the beneficiaries of the trust to agree to try to remove her.

I suspect your uncle should be getting his half of the rent and butting out of the trust's affairs. He should NOT be collecting money on behalf of the trust and distributing it to the beneficiaries outside of the vehicle of the trust.

Your sister would get money to pay for lawyers and realtors who act for her in her capacity as executor by selling the property, paying them their fees, and then distributing the remainder to the beneficiaries. Or by taking out a loan against the property, and using that to pay them. I can't see why she'd sue you at this point. You'll just ultimately receive less for the property than you would otherwise would have been entitled to.