Legal Question in Wills and Trusts in California
Living Trust Question
My parents set up a Living Trust for all their assets, with my brother as the trust executor. Everything is to be divided equally among the three children. My brother, the executor, has been given full discretionary power to make any and all decisions regarding the estate, without the consent or agreement from my sister and me. The main item of assets in this trust is a 3-story building worth several million dollars. It is spelled out in the trust that my brother can sell it, borrow against it, etc. The trust, of which I have a copy) was set up without my input.
Question 1: At what point would I become a one-third owner of the building (along with my two siblings) or would it always remain in the trust?
Question 2: If my brother, the executor, elected to borrow against the building and eventually failed to repay the loan, what kind of legal and financial ramifications would there be for the other two siblings? In this case, would I be responsible for the debt which would put my own assets in jeopardy?
1 Answer from Attorneys
Re: Living Trust Question
1) The trust should specify when you receive your distribution, and how. It may say "free of trust," or it may have a waiting period of several years or even a lifetime. Most distribute free of trust, meaning once it's become irrevocable, and bills are paid, you receive your share.
2) If your brother borrowed against the property as trustee, you wouldn't be personally liable (unless you separately agreed to do so), but it would of course be a lien against your share of the building. Loans to irrevocable trusts are generally more expensive, so they're less common, and the trustee would have to have some purpose that benefits the trust to take out the loan.
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