Legal Question in Real Estate Law in California
Beneficiary of a trust with option to buy property facing unfriendly sellers
As a minority beneficiary of a trust with an option
to purchase a property which is the main asset of the trust, how do I deal with the trust not cooperating with me on the issue of proceeds of sales to be used
for my down-payment. Does it sound prudent to purchase
the property without making sure that major part of
my interest in the trust is distributed at the time of purchase as a downpayment? Could I be just handing the money over to the trust and facing possibility of receiving very little of my benefits in the future? There is an outstanding loan on the property at around 30% of the value of the property.
3 Answers from Attorneys
Re: Beneficiary of a trust with option to buy property facing unfriendly sellers
I'm having a little trouble (may be the wee hours in which I'm addressing your question) identifying the legal issues you've raised. These seem to be that you want to purchase real property from the trust. And your concern is that once you do and the trust money is distributed to the beneficiaries, you might be shorted all or part of your inheritance. You've raised what is in my mind both a legal and an economic question. You didn't state if there was a price stated (you referred to it as an 'option') in the trust at which you may purchase the property? If the trust sets forth a price at which you can buy the property, and it's a good deal, you may want to exercise that option independent of the possibility you'll receive your share of the proceeds of the trust. This assumes you can afford the property if denied these proceeds. If you can get the property at an attractive price, you may want to exercise this option. And then consider going to court for some sort of accounting by the successor trustee of the trust proceeds. However, it may also be possible to take your beneficiaries interest in all or part of the corpus of the trust as an interest in the property. The law turns on the facts and although you've set forth facts. I think to properly address your question there are additional facts that an attorney will need to know to fully evaluate your predicament.
Re: Beneficiary of a trust with option to buy property facing unfriendly sellers
I agree with the previous answer that it is difficult to determine what action is proposed and by whom, so giving a well-reasoned answer is not possible.
Keep in mind that the trustee(s) have an obligation to all of the beneficiaries, and must deal with them impartially. If you suspect partiality, self-dealing, insufficient reporting, or anything else contrary to your legitimate interests, you should seek some changes, either by complaint to/negotiation with the trustee(s) or legal action.
Re: Beneficiary of a trust with option to buy property facing unfriendly sellers
If I understand your question correctly, it sounds like this could be taken care of with the proper escrow instructions--just make the distribution/down payment part of the purchase contract, and that way both parties will have to fulfill their obligations before the escrow can close.
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