Real Estate Matters: Financial Questions and Answers - August 15, 2009
By Ilyce Glink

Q: My father-in-law created a revocable trust in New York naming his son the beneficiary. His son was also trustee. It said the settler (the father-in-law) had use of the home until his death, when the assets were to be divided equally among all the kids.

He died, and the trust was to terminate upon his death. The only asset he had was the house, and the housing market is so bad now that the value of the home is quite low.

The family members need time to fix up the house before they could even think of having it appraised and putting on the market. Since the trust is kaput, should they file a quitclaim deed and put it in all of their names?

There are 10 kids, who do not like the idea of their addresses being public record, plus there is the hassle of receiving bills for 1/10 of the taxes, and other annoyances. Some of the kids live out of state.

Can they just quitclaim it from the son's name as the trustee to his name as an individual for now? Before it was put into a trust, the son was the owner of the property. (The father had put the house in his son's name.)

A: I'm a little confused by the specifics in your letter. First, the son owned the property. Then, the father created a trust and the son transferred the property into the trust, with the son named as the trustee of the trust. Now, the father is dead, and you claim the trust has terminated and you need to know what to do with the property.

You need to talk with an estate attorney who can help the son understand what he owns, what estate is left, and how any remaining inheritance (after debts are paid) is to be distributed.

While you say that the trust terminated at the time of your father in law's death, it probably couldn't terminate until it disposed of all of the assets in the trust. As the trustee, your brother-in-law would need to wind down the trust and dispose of the property. The trust is probably still valid and will remain so until its assets are sold or removed from the trust.

The trustee could quitclaim the property (or use a trust deed or other appropriate document) to transfer title from the trust to the ten children. He could also wait to do that at the request of all the children and then work with them to have the property sold and distribute the money.

An estate attorney could review the trust document and help you understand what the legal duties of the trustee are and in what timeframe they must be fulfilled.

Q: I need a loan in order to pay my real estate property taxes and credit card bills. My house is worth $555,000 and I owe $417,000. What should I do?

A: The good news is that your house appears to have some equity, so perhaps you can get a home equity loan for a small amount.

Most lenders won't provide a home equity loan if your primary loan and second loans total more than 70 to 80 percent of the total value of the property. Many lenders now are refusing to give any home equity loans above what they believe is 70 percent of the value of the home.

Right now, your home loan-to-value ratio is about 75 percent, but you might find a community bank or a local savings and loan that is willing to help you out with a small home equity loan for 5 percent of the property's value, or $20,000 to $25,000. You might even try a bank with which you've had a long-term relationship.

Another option would be to sell your property and use your equity to pay off your tax and credit card debts. While selling your home may not provide you with the kind of fast cash you need, and it may not be the solution you had in mind, it might be the best way to pay off your debts and start clean. You might be able to trade down your home to a more affordable home after paying off your debts.

Ilyce R. Glink's latest book is "100 Questions Every First-Time Home Buyer Should Ask: With Answers from Top Brokers from Around the Country" If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce's Web site, www.thinkglink.com.)

 

 

For more Real Estate articles and information visit our Real Estate Section (Click Here)

 

Ilyce R. Glink's latest ebooks are "Save Your House From Foreclosure" and "The Clutter Collector: How to Get Rid of Clutter Everywhere In Your House," which are available at her Web site, www.thinkglink.com. If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11 am-1 pm EST. You can also write to Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022

 

For more Real Estate articles and information visit our Real Estate Section (Click Here)

(c) 2009 REAL ESTATE MATTERS DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.