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What a Successor Trustee Needs To Know When a Parent Trustmaker Dies

How to Settle A Revocable Living Trust

Good Living Trust Attorney in Los Angeles

By Adena Mosesian and Stuart R. Simone Esq.

Following a loved one’s death, most people that have been named as the Successor Trustee in their loved one’s Living Trust have no experience as a Trustee.  Once the Trustmaker passes away, the Successor Trustee named in the Trust now becomes the Trustee.  As a Trustee you have a legal duty to make decisions that are in the best interest of the beneficiaries, so you want to make sure that you get off to a good start and get the best help throughout the process.

There are three main players in any trust, the Trustor, Trustee and Beneficiary.  The person who makes the trust may be called the Settlor, Grantor or Trustor.  A person who receives money or property from the revocable living trust is called a Beneficiary.  (These can loosely be referred to as “Heirs”.)  The person who makes the decisions about the money and property in the trust is called the Trustee.  A Trustee can be an individual or a financial institution; if there is more than one, they are Co-Trustees.  The Successor Trustee acts only if the Trustee (or all Co-Trustees) can no longer fulfill their role.  In a Revocable “Living Trust,” the Trustor is also the Trustee (or co-Trustee) until he/she passes away, thus the Successor Trustee then becomes the acting Trustee at that time.  If you were named as Successor Trustee in your parent’s Living Trust, when your last living parent dies you are now the Trustee and you suddenly have important responsibilities.  You now have Fiduciary Duties to the beneficiaries of the trust.

Here is a list of questions to get answers to when determining if you will need to hire an attorney to assist you with settling your loved one’s revocable living trust: Is the Revocable Living Trust fully funded; was the Trustmaker married; will the Beneficiaries receive their inheritance outright or in trust; will the Estate owe federal or state estate taxes or inheritance taxes; did the Trustmaker own a business; are the Beneficiaries going to fight over their inheritances; is a trust named as a Beneficiary of a retirement account; is an individual named as a Beneficiary of a retirement account?  And there surely will be more questions, depending on the circumstances.

This guide will provide a general overview of the four steps required to settle and then terminate a Revocable Living Trust after the Trustmaker dies.

  1. Initial Steps:

    • Locate important papers, including the Living Trust and other estate planning documents, along with recent tax returns, insurance policies, deeds, annuities, etc. and store in a safe place until they can be given to the trust Attorney.
    • Make initial phone class, contact immediate family, close friends, and the parent’s employer (even if they are retired, there may be some benefits available).
    • Make funeral arrangements, including memorial or flowers and funeral notice for newspapers.
    • Order death certificates.
    • You may want to change the mailing address to your home address to ensure you get the documents that will be sent to the Estate and to you as Trustee.

 

  1. Review the Trust Agreement with an Attorney:

Once you have located and sorted through the decedent’s legal documents and other important papers, the next step in settling a Living Trust is to meet with a trust attorney to determine if probate will be required and if the attorney’s assistance will be needed to help with settling and then terminating the trust.

  • Within a few weeks after your parent dies, you should consult with a qualified estate planning law firm to review the Revocable Living Trust with your attorney, review all documents, consider estate planning, discuss potential federal estate taxes, and determine the need for a probate administration.
  • First and foremost determine who is named as the successor Trustee(s) to settle the trust and who is named as Trustee(s) of any trusts that need to be created now that the Trustmaker has died. The prior Trustee may need to resign first if you’re going to be assuming responsibility and you are not named as the first Successor Trustee.
  • Make notes of the following: Who gets the decedent’s personal effects, who gets any specific bequests, who gets the decedent’s residuary trust, the date and location where the trust agreement was signed, who signed the trust (and pour over Will, if any) as witnesses and the Notary Public.
  • Have the attorney prepare a “Trust Certification” that verifies your authority as the current Trustee of the Trust.

 

  1. Your First Tasks as Successor Trustee:

Now it is time to make a complete list of all the various assets and liabilities (credit accounts).  This is the “trust estate.”

  • Assume control over assets by changing door locks or installing security alarms and safeguarding valuables to limit access to others; “Beneficiary Raids” are common occurrences during these stressful times and can lead to disputes.
  • Establish date of death values for all your loved one’s assets by calling all the financial institutions where their assets are, in order to determine if any estate taxes and/or inheritance taxes will be owed; you may need professional licensed appraisers, especially for real property (such as houses) and large personal property such as boats and planes or valuable collectibles. Also note the value of assets that can pass outside the trust, such as property owned as tenants by the entirety or joint tenants, payable on death deeds or transfer on death accounts, liefe insurance, IRAs, 410Ks and annuities with named beneficiaries.  Among other things, the values assigned by the appraiser will used for calculating taxes.
  • Notify credit card companies, utility companies, mortgage holder, and other creditors about your loved one’s death.

 

  1. Managing the Trust:

Once the date of death values have been determined for all of the decedent’s assets, the next step in settling the Living Trust is to pay the decedent’s final bills and ongoing expenses related to administering the trust.  It is the Trustee’s job to figure out what bills the decedent owed at the time of death, determine if the bills are legitimate, and then pay the bills.  You will also be responsible for paying the ongoing expenses of administering the trust, such as legal fees, any accounting fees, utilities, insurance premiums, mortgage payments, and HOA fees.

  • Make sure that the homeowner’s insurance does not lapse and remains in force, with you named on the policy as Trustee of the Estate.
  • Manage the trust assets safely and pay all bills and taxes in a timely manner while keeping good records and bookkeeping.
  • Evaluate whether trust assets, such as real estate or business, should be sold in order to raise case to pay expenses and taxes. If property is to be kept, then you will need to send proof of death (death certificate and affidavit of death) and if the property is left to you, apply to assume the mortgage loan(s).
  • Do not make risky investments or withdraw or rollover IRA’s annuities or 401’s without speaking to your attorney. Withdrawing could incur unnecessary taxes and the beneficiaries could sue you.  Remember, as Trustee you have legal fiduciary duties.
  • Make sure to file your loved one’s final federal and/or state income tax returns and pay any taxes that may be due in a timely manner.
  • If the estate earns income during administration, you need to make sure to prepare and file all required federal estate income tax returns (IRS Form 1041) and state.
  • If the estate is taxable for federal and or state estate tax purpose, you will be responsible for preparing and filing the federal estate tax returns (IRS Form 706) and/or a state inheritance tax return, and then paying the tax bill(s). While many estates and trusts may not be affected at all by estate taxes, inheritance taxes, gift taxes, or generation-skipping transfer taxes, the majority will be affected in some way or another by income taxes.

 

  1. Making Distributions and Terminating the Trust

Usually the first question that the trust beneficiaries will ask the successor Trustee is “When will I get my inheritance check?”  But unfortunately for the beneficiaries, making distributions of the remaining trust assets to the beneficiaries and terminating the trust is the very last step in settling a Revocable Living Trust.  Prior to making any distributions to the trust beneficiaries, you must be certain that every single expense of administering the trust (and the probate process if there is one) an all taxes have been paid or that enough assets have been set aside to pay the final bills and taxes.  Always keep in mind that if expenses come up after you distribute the estate, you will have to pay these expenses our of your own pocket.

You as a Trustee have the responsibility to make sure that every single expense of administering the trust (and the probate estate if there is one) and all taxes have been paid or that enough assets have been set aside to pay the final bills and taxes, so it does not come out of your own pocket later on.  In addition, if probate of some of the decedent’s assets is necessary, then the beneficiaries will need to wait until the probate estate is closed and the probate assets have been transferred over to you before the trust can be terminated and the beneficiaries can receive their inheritance.

If administration of the trust is expected to take more than a year, then the successor Trustee should work closely with the trust attorney to plan for setting aside enough assets to pay the ongoing trust expenses and then making distributions to the trust beneficiaries in multiple stages instead of in one lump sum.

 

Gomez & Simone is a full service real estate law firm representing families and business people, homeowners and renters, landlords and tenants, with offices throughout Southern California.  This article is informational only and should not be used as legal advice.  Please note that laws may have changed since this article was published.  Before taking action, we recommend that you consult with one of our attorneys about your specific matter.  Please contact your local Gomez & Simone office or call us at 1-855-219-3333 or email us at info@ gomezsimonelaw.com.

 

Construction Defect? California’s “Right to Repair Act” (SB800) gives Residential Builders the Benefit of the Doubt

If you have bought a brand new home, you probably like knowing that everything that comes with it is, well, new, and that all of the materials it was built with are new too. But what happens when a builder has not thought everything through? In California, there is only one cause of action available to a homebuyer who discovers a construction defect in their new home: The California Builders’ “Right to Repair Act” (SB800). Read More

Sunset Strip’s Dramatic Makeover Starts

Sunset Strip’s Dramatic Makeover Starts

Beautifully sited in West Hollywood, Sunset Strip covers an area of 1.5 miles within the ever popular Sunset Boulevard. The Strip is a famed, high-energy area with a dense population, exciting nightlife, clubs, bars, luxurious accommodation facilities, and mouthwatering gastronomic options.

Sunset

Image Courtesy: Finance & Commerce

This place is undoubtedly a favorite hangout of celebrities, rock stars, and supermodels who also own multi-million-dollar properties here. The huge billboards and the rich history of Sunset Strip make it an attractive haven for residents as well as tourists. To add to the intrinsic appeal, Sunset Strip is now undergoing a drastic makeover, with huge hotels, clubs, and shopping centers coming up in the boulevard.

Residents will be happy to know that the new developments include tall hotels with hundreds of rooms for accommodation, luxurious as well as affordable residences, and extended commercial spaces. The best part about Sunset Strip is its proximity to the exciting venues of Hollywood and downtown LA. This area is also a major business hub in the city of LA.

sunset

Image Courtesy: Pond5

Sunset Strip has a special place in the hearts of Angelenos, but there would be a marked difference in its appearance when the current developments finish. Currently, it is nowhere close to how it looked a decade back. The law of demand and supply is at work, and redevelopments – to cater to the housing and commercial needs – have become a necessity now. However, construction work in a few high-profile real estate and commercial projects is yet to start. Hopefully, we would see a new Sunset Strip in a couple of years.

About Gomez & Simone

Gomez & Simone is home to experienced and reputed real estate law attorneys known for providing seamless solutions to clients. Their supremacy, strategies, and commitment are evident from the number of clients who approach us daily. Gomez & Simone has assisted numerous clients and businesses in recovering from financial losses and other such predicaments. Associating with them means your well-being will always be considered.

Dealing With Second-Hand Smoke in Your LA Home

Life in California as a tenant may not be very pleasant at all times, especially if you have neighbors who are smokers and you are not. Second-hand smoking or passive smoking can be very dangerous and if you are facing this problem in your residential complex, you should address it sooner rather than later. Renters in major cities like Los Angeles can face such issues i.e. having to deal with noisy and heavy-smoking neighbors. The situation can get worse if you are suffering from asthma; have kids who should be kept in a safe environment, or simply hate the smell of cigarette smoke.

There are steps to stop your neighbor from smoking partially or completely. There are also laws in certain Californian cities that ban smoking in multi-unit buildings. However, most of the cities have no restrictions when it comes to smoking in a residential complex. You can also consult a landlord-tenant lawyer for the right guidance on second-hand smoke laws. No matter where you stay or what you do, you should take the steps discussed below to protect yourself from passive smoking:

passive smoking

Image Courtesy: Scope Blog – Stanford University

a) Verify Your Lease or Rent Agreement

Non-smoking laws are readily prevalent in the workplaces of California. Seeing this, an increasing number of property owners have started prohibiting smoking in their housing units and common community areas. In fact, landlords in California have the legal authority to ban or limit smoking in their rental houses. According to the law, prohibiting smoking within 25 feet of a children’s play area is a must.

Ideally, you should check the lease or rent contract thoroughly and look for the policies related to smoking. Since 2012, it is the duty of every landlord to include the smoking policy for their residential places in a lease or a rental agreement. If this policy is missing in the agreement, you should ask the unit owner to add it before you finalize the deal.

b) Look for Local Non-Smoking Laws

There are cities in California where smoking is not banned but restrictions are in place to curb this practice in certain multiple-unit complexes and public areas. You may be spared from second-hand smoke if you are staying in a public housing unit or university accommodation. Interestingly, many big counties like Los Angeles County and San Diego County have smoke-free policies for people staying in public lodgings.

The best thing to do would be visit the American Nonsmokers’ Rights Foundation and get some help and guidance to escape from the menace called second-hand smoke. University students can consider the Tobacco Free College Campus Initiative to check if their university is actually tobacco- or smoke-free.

smoke

Image Courtesy: NBC News

c) Contact the Property Owner

Once you find that the local law or your lease doesn’t allow smoking in rented homes, you should speak to your landlord to sort out the issue. You can also complain as a group if the other tenants in your apartment building are also facing the problem of second-hand smoking. Tell your home owner to go through the laws related to passive smoking as mentioned in your rental agreement and ask them to enforce it on the neighbor at fault to limit or stop their smoking altogether.

A written letter or an email to your landlord with details about the issue and the legal provisions for the same would be ideal. Don’t forget to keep copies of your written communication with your landlord. This will act as proof if you eventually decide to take legal action with the help of property lawyers in California. When you talk to your property owner, you should also ask them to provide a few solutions to problems like repairing faulty ventilation and filling window gaps.

d) Final Steps for Addressing Second-Hand Smoking

If finding a solution through your landlord is not possible and if second-hand smoking is affecting your health and personal life, you can think of vacating the property. Compromising with your health is not at all advisable; so, breaking the lease and moving to another residence will be a good solution. If the problem persists and the apartment owner does not heed your complaints, you can consider filing a lawsuit against them. In a legal case, you should clearly mention the reason why you are seeking a legal solution and how second-hand smoking has disrupted your life in your rented home.

Winning a lawsuit for second-hand smoking may not be easy if there are no laws to support you. You may also sue the other party for monetary damages like medical bills and laundry bills in the Small Claims Court of California. For such damages, you can claim up to $10,000 in this court. Legal steps are time-consuming as well as expensive; so, consult a real estate lawyer in Los Angeles before you decide to file a lawsuit. Legal actions can also hurt relationships; so, see if it is worth the trouble.

 

Landlords Likely To Hike Rents If Proposition 10 Passed

Recently, Jacob, a North Hollywood resident, came to know from his housing complex manager that his landlord is planning to increase the rent from $1,850 to $2,000 per month. This is not at all good news as the hike would be much more than the usual yearly ones. Initially, Jacob thought that the increase in rent might be because of any renovation or repair, but that is sadly not the case. The manager of the building opined that the upcoming election was the reason behind the increase.

According to various renter attorneys, Los Angeles landlords are increasing the rents before November because there will be a statewide ballot when voters decide on Proposition 10. This is an initiative, which would lift the restrictions on rent control in various cities of the state. This means that LA landlords may have to face rent control regulations in November.

According to Larry Gross, Director of the Coalition for Economic Survival, property owners are resorting to price hikes to pressurize residents into voting against the proposed measure. Some of the real estate websites have also listed apartments informing renters of an imminent rent increase in reply to the ballot initiative.

Proposition 10

Image Courtesy: Realty World

Property managers are even informing about the rent increase to people staying in buildings that do not fall within the ambit of the rent control restrictions. They have cleverly added a clause in the letters sent to the tenants that rental prices would be revised and reduced if the ballot measure failed. Many experts believe that all these tactics of landlords and property managers are being employed just to intimidate or confuse the tenants who would be voting.

Vague assurances from apartment owners that rents would be slashed if the ballot measure failed may convince lodgers to vote for something, which does not favor their financial well-being in the long run. The sad part is it is a punishment that tenants have to bear for no fault of theirs. Without even knowing whether the measure will be passed, they would have to pay the toll, which is a big misfortune. This is not the first time when LA residents are seen facing a situation wherein they are on the losing side.

About Gomez & Simone

Gomez & Simone is home to experienced and reputed real estate law attorneys known for providing seamless solutions to clients. Their supremacy, strategies, and commitment are evident from the number of clients who approach us daily. Gomez & Simone has assisted numerous clients and businesses in recovering from financial losses and other such predicaments. Associating with them means your well-being will always be considered.

135 Apartments Under Construction at Jordan Downs

Public housing in Los Angeles has been going through various changes in the last few months, and the latest project at Jordan Downs in Watts will certainly bring cheer to those seeking good accommodation at affordable rates in the city. Apart from the 135 new apartments, this project also includes a sketch highlighting the future transformation of the site with a larger community space and shops.

real state images

Image Courtesy: Councilmember Joe Buscaino And HACLA

The Angelenos in this housing society will have the desired opportunity to enjoy a convenient and easy lifestyle as the redevelopment is planned accordingly. The residences in this site will include one- to five-bedroom sets and they would be built in six different blocks. It is already decided that most of the apartments would be allotted to low-income people; however, the number of units reserved for the current residents is still unknown.

This is a $73-million project and The Michaels Organization is responsible for its expansion. It is also a part of the multi-phase redevelopment plans that are designed for this complex. Once the development is complete in all the phases, the entire compound would boast of 710 new houses and townhouses, almost 9 acres of parking space, and a retail space of approximately 165,000 square feet.

real state 2

Image Courtesy: Councilmember Joe Buscaino And HACLA

 

BRIDGE Organization, an NGO, and The Michaels Organization are the masterminds behind the whole redevelopment plan. A half-mile expansion of Century Boulevard is also in the pipeline and it will eventually connect Grape and Alameda streets and act as an important new road in the Jordan Downs area.

About Gomez & Simone

Gomez & Simone is home to experienced and reputed real estate law attorneys known for providing seamless solutions to clients. Their supremacy, strategies, and commitment are evident from the number of clients who approach us daily. Gomez & Simone has assisted numerous clients and businesses in recovering from financial losses and other such predicaments. Associating with them means your well-being will always be considered.

80 Single-Family Homes to Be Built in Porterville, CA

A new neighborhood by the name of Cambria is planned to be built on 15 acres of land by partners San Joaquin Valley Homes and Preside Residential Capital. The recently bought farm land is sited in Porterville, California and the residential project would cost over $18 million. 80 single-family garden homes would be scattered all over this plot to offer some respite to families looking for proper accommodation.

The construction of the model home is expected to start in January 2019. This project will offer the perfect opportunity to local residents to live in a beautiful area. The modern-style homes of Cambria will have sizes varying between 1,297 to 1,597 square feet. Residents can also opt for 3-bedroom or 2-bedroom sets with open floor, and their carpet sizes would range from 4,750 to 5,840 square feet. Various rural housing projects and agricultural properties surround this residential complex, enhancing the beauty of the location.

Porterville

Image Courtesy: bdmag.com

Single-family homes have a local impact when built in typical metro areas. Single-story houses are very much in demand amongst those who are tired of living in high-rise apartments and a busy city life. Interestingly, Catalina, a newly built housing society in Visalia, California boasts of 51 single-family residences meant for serene and peaceful living.  Such projects in bulk can certainly help reduce the dearth of affordable housing options in the state.

About Gomez & Simone

Gomez & Simone is home to experienced and reputed real estate law attorneys known for providing seamless solutions to clients. Their supremacy, strategies, and commitment are evident from the number of clients who approach us daily. Gomez & Simone has assisted numerous clients and businesses in recovering from financial losses and other such predicaments. Associating with them means your well-being will always be considered.

Steps To Take If A Property Seller Conceals A Defect

There can be a scenario wherein someone buys a dream home but soon realizes that there is a defect in the property, which was not disclosed by the seller. Such instances can make you feel cheated and disgusted. A leaking roof or a malfunctioning plumbing system can be examples of defects that you may notice after moving into a new residence. You may end up incurring plum bills to fix the issue. Now, it is important to understand that paying such bills is not your responsibility if the seller concealed the defects. You can also file a lawsuit to ensure fair compensation for the damages incurred.

Sellers Required To Make Written Disclosures Regarding Defects

According to California law, a seller must share true and real disclosures regarding their property with a buyer. Anything that may dissuade a buyer from making the purchase should be disclosed in writing at the very outset. These vital details about a property are commonly called “material” facts, and a property seller may have to face harsh penalties if any of these facts is not disclosed on time.

Defining Material Facts in California

The information about a housing facility’s walls, floors, insulation, roof, doors, windows, building foundation, sidewalks, boundary walls or fences, electrical systems, plumbing systems, and other structural elements comprises material facts. It basically means that any fact of the concerned property is a material fact and it can affect the value of the property or its desirability for a potential purchaser.

Property Seller

Image Courtesy: Educaloi

Under California law, a seller must disclose the material facts by completing a “Transfer Disclosure Statement” form. Through this form, the current status or condition of a property is described accurately. Before you decide to sue your seller, you should minutely verify the TDS to see if a defect that is upsetting you now was actually disclosed by the buyer or not.

Proving the Seller Hid a Defect

Once you are sure that the seller kept a known defect secret, you have the right to sue them for deceitful misrepresentation. Proving the seller’s fault in concealing the defect would be easy if you have sufficient evidence. For instance, a leaking roof that was intentionally covered with paint can act as solid proof. Another evidence to prove the seller’s wrongful intent would be the property agent’s statement suggesting the seller had instructed them to conceal the defect from you and other buyers.

Speaking to neighbors and your agent will assist you in collecting various related facts. If you decide to file a lawsuit, a competent attorney would interview the relevant people and try to establish that the seller knew about the defect, but kept it secret.

Seller’s Responsibility toward Damages Because of Cover-Up

Instead of unveiling the truth, if the seller knowingly hid a defect, you can sue them for wrongful misrepresentation. When you file a lawsuit, you may be eligible for the following damages:

  1. a) Compensatory Damages:The court may order the seller to compensate you for the expenses you incur because of the concealed defect. These can include repair costs and reduction in the value of the property as a result of the defect.
  2. b) Punitive Damages:You would be able to avail punitive damages if you prove that the selling party acted with malice while hiding the defect. Punitive damages are meant to punish people for their wrongful acts and they can be awarded to you along with the compensatory damages.
  3. c) Rescission:This is a rare case wherein the purchase contract is nullified or rescinded, your payment is fully refunded, and the seller gets their property back.

 

Remember that suing a seller is not the only option, and resolving issues informally too can help you save a lot of time and money. It is recommended that you call up a home warranty company to find out if a problematic item in the house is under warranty. Repairs can be done free of cost if the warranty is still on. Ideally, you should write a letter to the seller explaining in detail all the issues you are facing. You can demand payments for all the expenses required for repairing or changing the defective items. If all these actions aren’t fruitful, you can always approach an attorney for legal help.