Changing revocable trust isn’t an option after death, but trust beneficiaries should look into their rights and compromise on disagreements.
Q: I read a few articles on your website regarding living trusts and life estates, but my issue has an unusual twist.
My now-deceased father created a revocable living trust with my still-living mother. My only sibling and I are successor trustees. I have been living with my now 85-year old mother for 16 years, as her companion and sole caregiver and she wanted to change the trust to insure that I would be able to continue to live in the house after her death and not have to sell it in order to split the trust equally with my sister.
Unfortunately, the attorney who created the trust said that my father specifically stipulated in the trust that there be no change to the disposition of the house (the only item in the trust that can’t be changed by my mother). The only solution he suggested is that I have the house appraised upon my mother’s death and give my sister half of that value from the remaining funds in the trust. The house is owned outright at this time.
My mother is not satisfied with that solution and is upset that she is unable to make this change to the trust and fears that after these many years of caring for her, I could find myself on the street (this is not a large estate by any measure).
Do you have any other suggestions?
A: We can see how your mother might be upset, but it would appear that your father had a specific plan in mind and didn’t want a change in that plan. While it may have been that the home was in your mother’s and father’s name at one time, when your father created the living trust, the home was placed in the trust. Once the home was in the trust, only your father could revoke the trust or change its terms.
While you didn’t give us all of the terms of the trust, your mother is the current trustee of the trust and you and your sister are the beneficiaries. The trust, perhaps, also provides for the right to have your mom live in the home for the rest of her life.
Your father’s plan seems to have been a sound plan. It gave your mom the right to have a home and passed that home down to you and your sister after your mom’s death.
Now your mom and you want to see if you can end up as the sole owner of the home. But your sister has an interest in half the home and you want to take that away from her. If your sister agrees that you should be the sole owner of the home, you and your sister could get together and agree to have the title of the home transferred to you – keeping in mind that if the trust allows your mom to continue to live in the home, your mom would continue to have that right.
While it is quite honorable and generous of you to be your mom’s sole caregiver and provider, your father wanted the home to pass down to you and your sister. Perhaps he knew that at some point in the future a disagreement could come up and wanted to make sure that both you and your sister ended up with half of the home each. If that’s the case, we would suggest you honor your dad’s wishes.
But if your sister agrees with you that the financial support you have given your mom over the years outweighs becoming a half owner in the home, the attorney that told you that you could appraise the home and pay her half of its value was correct.
You could look at the trust document and see if the trust document mentions the cost of the maintenance of the home. The trust still owns the home and the trust could have the obligation to make the payments for the care, maintenance and upkeep of the home. If the trust has not made those payments and was required to make those payments, the trust might also provide for the reimbursement to the person that made the payments.
You might want to have your own estate planning attorney review the trust document with you. If the trust document provides for the reimbursement to you of those expenses, when the home is sold, you would be owed the money you put into the home. But you’d better make sure you have good records to show for all of those expenses.
Nevertheless, if the trust agreement provided for your mom to pay for all of those expenses while she lived in the home, you wouldn’t be entitled to reimbursement and would be out of luck.
We point this out to you to understand that you and your sister might eventually end up splitting the proceeds from the sale of the home or you might have to buy your sister out of her half interest in the home, but you might be able to offset the payment with expenses you put into the home. Talk to a different attorney to review the trust agreement and determine your and your mother’s responsibilities while living in the home, along with an understanding of what you could get out of the home at the time your mother dies and the home could become yours and your sisters.
This has been helpful. Thank you.
Kim, I’m glad you found it useful.
Ilyce Glink