El Cajon, CA asked in Estate Planning for California

Q: I asked escrow to distribute funds separately, but they said funds could only be released to the trust.

My mother has been ruled incompetent, and I am one of four siblings who share a quarter of a living trust. Four of the four siblings have the power of attorney. 3 out of 4 siblings, including myself, are successor trustees as of 7 years ago. We're selling a property in Los Angeles for $12 million that has just opened escrow in 2023. According to my brother Brad, the 1031 exchange is the estate's escrow instruction, which releases $50,000 to each of the siblings and places the remainder in a 1031 exchange.

. My mom wanted to have the money split equally from escrow. Two successor trustees voted against the 1031 exchange. The third sibling voted for the 1031 exchange. As a result, two out of three people voted for the proceeds to be divided equally. How do we put the voting system into gear, submit it to escrow, and have the proceeds released from escrow be distributed equally to each of us separately? Or is there another route I have to take?

Related Topics:
2 Lawyer Answers
Julie King
Julie King
  • Estate Planning Lawyer
  • Monterey, CA
  • Licensed in California

A: I will start by saying this: You really need to get the assistance of an estate planning lawyer because it does not appear that you understand how trusts work or what your mother's trust says. First, I don't know any lawyer who would write a trust with four people named as successor trustees. I hope your mother did not get her trust online and write that provision herself. Having four trustees is asking for either a convoluted nightmare or a lawsuit. I often see two people acting as co-trustees causing problems. Four is double the trouble. If there are four successor trustees, it's possible that all four of you will need to agree on every single transaction and sign each piece of paper.

It is EXTREMELY IMPORTANT that you understand the money in the trust does NOT belong to the four children. It belongs SOLELY to your mother. The Successor Trustees have duties set out in the law that must be fulfilled. The most important duty is to take your mother's assets and take care of her healthcare, housing, and all other bills. The money is NOT to be taken by the kids just because they feel they will inherit it one day. That's NOT how trusts work. No one is entitled to any of your mother's assets until four (4) things have happened: (1) your mother has died; (2) all of your mother's bills have been paid in full and her final taxes have been paid to both the state and federal governments; (3) it has been determined that no probate is required for assets outside of the trust; and (3) the successor trustee(s) has/have been reimbursed for all money paid out of pocket for your mother's bills after producing receipts. There are many more steps, but those are universally true for almost all trusts. IF there is any money left after all of that has been paid, THEN whoever is listed in the trust gets whatever percentage the trust says you get. Taking it early is seen as stealing your mother's assets.

So, the fact that the kids are seeking to get your mother's assets while she is still alive is incredibly troublesome. If anyone takes your mother's assets for their own use before the proper time, they can be sued for Elder Financial Abuse, which is why I have some very serious concerns about your situation. Again, it is obvious from your question that neither your brother nor you understand how a trust works or what your mother's trust says. Not knowing either of those things can get all of you into a lot of legal trouble. Go see an estate planning attorney right away -- before you get yourself into a lot of hot water.

Rebecca Sommer agrees with this answer

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Estate Planning Lawyer
  • Sacramento, CA
  • Licensed in California

A: It is important to review the terms of the living trust to determine how the proceeds from the sale of the property should be distributed. If the trust provides for equal distribution among the beneficiaries, then the trustees can request that escrow release the funds to each beneficiary separately.

If the terms of the trust do not provide for equal distribution or there is a disagreement among the trustees, it may be necessary to seek the assistance of a trust and estate attorney to resolve the matter. The attorney can review the trust documents, advise on the applicable laws, and help mediate any disputes among the trustees.

In any case, it is important to communicate with the escrow company to ensure that they understand the instructions and requirements for releasing the funds from the sale of the property.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.