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Can a family member live in a house owned by a Trust?

Tampa, FL |

I am the direct granddaughter of the settlor, and daughter of the only Trustee and first of two beneficiaries. My grandmother bought a house here in FL before she passed. The Trust now owns it and my mother handles the Trust. Will it be possible for me to move in (rent free or not!) with or without a rental agreement? She doesn't really want to be a landlord, but doesn't necessarily want to sell or not use the house.

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Attorney answers 5

Best Answer
Posted

If the trustee does not want to sell or use the house, she can rent it to someone. If you are the lessee, you must have a rental agreement and pay fair market value for the rent, plus utilities. If your mother does not want to be a landlord but does not want to sell the house (the market in Florida will go up - but no one knows when), perhaps she should resign as trustee and let the successor trustee administer the trust. The trustee is a fiduciary and it is the trustee's responsibility to take care of all of the assets of the trust for the benefit of all beneficiaries.

Asker

Posted

Very helpful. I have no issues whatsoever with paying rent or having a rental agreement. I think my mother is more afraid of the paperwork regarding being a landlord more than anything else. I have no plans of "mooching" or otherwise. I know that somewhere down the line of the trust, I become a beneficiary of all the assets. But, I just happened to love this house. Thanks very much for your response, I'll be sure to show her this.

Posted

I agree with Attorney McMahon. Your mother actually has a legal duty to administer the Trust (which includes management and disposition of trust assets) in a manner consistent with the terms of the trust document. If she feels uncomfortable fulfilling that role, then perhaps she would want to step down and/or appoint a successor Trustee. The process for either will generally be laid out in the trust document.

If you are entitled to the income of the Trust, then you should be able to live in the house. If, on the other hand, you are not entitled to income, then you would have to do as Ms. Bradenton says and you would have to become an actual fair-market value tenant. Otherwise, you (and your mother) could be violating the terms of the trust.

More than anything, you should look at the trust document (or have an attorney do the same) and you will likely find the information that you seek. It is common for a trust to hold property such as a house and to specifically describe the beneficiary's rights and obligations for use the house.

Hope this helps and best of luck!

marcos@martinezanda.com Office tel: (561)245-4723 Website: www.martinezanda.com. The answer provided does not create an attorney-client relationship, nor is the answer provided intended to be relied upon as legal advice. The information provided by the questioner is insufficient to serve as the basis for meaningful legal analysis. It is the questioner's responsibility to seek legal advice from an attorney who has had the opportunity to familiarize herself with the full details of the questioner's case. By providing these answers, I am not obligated to respond to any subsequent communication from the questioner. If the questioner would like me to serve as their legal counsel and render legal advice, they will have to sign a retainer agreement. The questioner is free to contact my office for a complimentary 30 minute consultation.

Asker

Posted

Again, a great answer! Thanks very much. We do have an attorney in VA, who was my grandmother's original attorney. He's gone over the Trust for us for other reasons. I personally have not read through it (I plan on it, but of course some of the lingo is a bit hard to nail down), but I do want to help my mother find an attorney here in FL and do exactly what your recommended.

Posted

I agree with both of my colleagues. The problem with anyone answering questions like this is that we do not have enough in the way of facts. The terms of the trust are likely to address your questions. If the trust is silent on these issues, then State law applies. Since your mother has an attorney who is very familiar with the trust provisions, he is the best person to direct these questions to.

Your summary does not have enough information for us to give you a complete answer. Your mother DOES owe fiduciary duties to the trust beneficiaries. The situation is a lot different, however, if she is the only beneficiary during her lifetime. Since you asked about selling the property, presumably, she has the right to do that. Since you appear to love the property, rather than renting it, it might make sense for you to buy it from the trust. The trust might be able to finance your purchase. If you are a beneficiary of the trust upon your mother's death, you would receive a portion of the purchase price back, as well. In the meantime, you would be able to take advantage of homestead laws, and you would be eligible for tax deductions that you would not have as a renter.

Your mother should consult her attorney to determine how best to proceed. The situation is a lot different if your mother has a 2% interest in the trust and she needs to manage the trust assets for the benefit of the other 98%. The facts often drive the choice of which option is best.

James Frederick

*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.

Asker

Posted

Thanks for your response. I wish I had a ton more info on the subject, and I know we'll need to meet with the attorney again to get sound answers. Hopefully she can get enough info for her comfort and things will work out smoothly.

James P. Frederick

James P. Frederick

Posted

This sounds like a great opportunity for you AND the trust. Hopefully everything will work out well.

Posted

As both of my colleagues pointed out, regardless of her relationship to you, the Trustee is bound by her agreement to administer the trust in the manner directed by the trust and for the benefit of the beneficiaries. Since there is another beneficiary, the Trustee cannot just proceed without consideration of that party - solely for your benefit. Moving in without a rental agreement and without paying value for your occupancy will run counter to the best interests of the other beneficiary unless they disclaim their share.

Carol Johnson Law Firm, P.A. : (727) 647-6645 : carol@caroljohnsonlaw.com : Information provided here is anecdotal and should not be relied upon or considered legal advice. Every matter is different and answers given here are general in nature and may not reflect current Florida law at the time you are reading this posting. Please contact me if you feel you need additional assistance with your matter.

Posted

The trustee controls the house so it is up to the trustee. Contact my office for free consultation.

Carol Anne Johnson

Carol Anne Johnson

Posted

Actually, that is not entirely true - if the house is part of the trust corpus, the Trustee MUST, as part of their fiduciary duty, administer the Trust as the Trust directs and for the benefit of ALL the beneficiaries.

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