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Acquiring a home in parent’s trust

By ERIC P. FEICHTHALER - Real Estate Law | Sep 23, 2022

Dear Mr. Feichthaler:

My mother held her house in a trust and recently passed. I am the successor trustee, and my sister and I are the beneficiaries. The trust provides that we each receive half of the assets of the trust. My sister wants to keep the house and move in, while I would be happy with half the value of the house. Do we need to both take title then I sell my portion, or is there another way?

— Ella D.

Dear Ella:

First, my condolences to you and your family on the loss of your parent. She obviously cared about you and your sister to take the time to set a plan to avoid probate on the house.

As successor trustee, you would take over the duties of managing the assets of the trust upon her passing. This in-cludes the ability to sell or transfer real estate. First, it will not be necessary for both of you to take title to the property. The trust can distribute the home to your sister through a deed. Your information does not include whether there are other assets in the trust. For example, if there were a similar amount of financial assets as the value of the home, you could transfer all of those to you, transfer the home to your sister, and no money would be exchanged between the two of you.

If the house is the only asset, then your sister would need to find a way to “buy you out” of your half. This can be done with cash on hand or financing through a lender. You could also consider being the lender yourself. That is, in exchange for your interest in the home, you could have your sister sign a note and mortgage owing you half the value of the property, and she could pay you just like she would a normal mortgage. If you are in a position where you don’t need the money immediately, and prefer payments over time, this could be a great option for you.

Although many transfers between family members can be very informal, when it comes to a transaction of this financial magnitude, trying to handle such a transfer on your own can lead to serious disputes later. Seek professional advice on the specific facts of your situation before proceeding.

Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.