Irvine, CA asked in Real Estate Law and Probate for California

Q: How can one trust beneficiary purchase shares of a home from two other beneficiaries? Revocable trust.

I understand successor trustee can grant deed 1/3 of property to me, as parent to child transfer, then I can purchase my two brother's shares through escrow. What are the details of this process?

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3 Lawyer Answers
Nina Whitehurst
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Answered
  • Probate Lawyer
  • Crossville, TN
  • Licensed in California

A: One option would be to discuss what you want to do with a local title company and open an escrow with the title company. You deposit the purchase price and your siblings signed a deed to you and deposit it into escrow, and the escrow agent records the deed and disburses the funds to them. It is a little more involved than that, but that is the essence of it. An attorney can certainly help oversee the process.

You should know that the sibling-to-sibling transfer will cause reassessment of the portions transferred for property tax purposes. There is no exemption for sibling-to-sibling transfers. If that is problematic to you, then you should consult with an experienced trust administration attorney about this. There are other ways to accomplish your goal without causing reassessment but they are much more involved (and expensive) and would require attorney assistance to ensure it is done correctly.

James Edward Berge agrees with this answer

1 user found this answer helpful

James Edward Berge
James Edward Berge
Answered
  • Estate Planning Lawyer
  • San Jose, CA
  • Licensed in California

A: The other way that Nina mentions in her post involves borrowing money by the trust secured by trust-owned property (the home) prior to distribution to the beneficiaries in an amount necessary to equalize the distributions to the kids: house (subject to new debt) to one and cash (proceeds from borrowing) to the others. This is not your typical loan transaction. It’s frequently very short term debt (sometimes referred to as a bridge loan) which is made by private money lenders (not banks) through a loan broker which will be refinanced into permanent financing (30 year loan offered by a bank) after distribution. You will definitely need a trusts and estates attorney familiar with this type of transaction if you hope to be successful.

1 user found this answer helpful

John B. Palley
John B. Palley
Answered
  • Probate Lawyer
  • Roseville, CA
  • Licensed in California

A: Definitely work with an attorney familiar with this process. There are a couple ways to get around the parent to child problem. The most common is to do a written agreement showing other estate assets going to siblings. This requires that the estate have equal amounts of money. If not, the other work around, is having the estate borrow enough to do equal distributions. Work with an expert as it’s easy to mess up and cause a reassessment.

1 user found this answer helpful

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