When the ancient conqueror Alexander the Great was making his way through Asia, he confronted a special challenge: the Gordian Knot. Whoever loosed the enormous, tangled knot, legend held, would rule an empire. Alexander struggled to untie the knot, but couldn’t make progress. Then, frustrated, he took out his sword and swiftly chopped it in half.
California trust beneficiary litigation over the transfer of the family home can be just as frustrating, and it’s all too common. So too is the confusion that accompanies attempts at resolution. There are plenty of knots to untie. So, how does this problem arise?
The causes that generate house disputes between existing and disinherited trust beneficiaries may be as benign as a trust maker’s sober and well-considered decision of providing a home for one child and leaving other trust assets to the remaining children. That said, not all transfers are benign.
It is not uncommon to litigate against wrongdoers steeped in sordid events where a caregiver’s undue influence and fraud were vile mechanisms to seize the assets of individual suffering on her deathbed.
When trust beneficiary house litigation ensues, there are at least two interested parties: the beneficiary who received the house; and the beneficiary or disinherited heir who didn’t receive it. The trustee is usually aligned with the beneficiary of the last trust executed by the decedent.
There are numerous variations to the general scenario. Was the house transferred during the decedent’s lifetime? Was the house long promised to someone other than the trust beneficiary that received it? Is the house beneficiary a caregiver? Can the house beneficiary afford to stay in the house?
Whatever the cause of the dispute when it comes to settling, it’s pretty obvious that the house is going to have to be sold. To think otherwise can be delusional, particularly where the only trust estate asset is the house. House occupants are very slow in accepting the unwelcome fact that they’re going to have to move.
So, what are some of the ways that this problem is solved? Outright sale. The parties agree to a particular percentage split, the house is sold, and payment to each litigant is often paid directly from escrow.
The variation on the percentage split is a “sum certain” settlement. A “sum certain” provides that a particular dollar settlement is a preference on the distribution of trust house sale proceeds. Sometimes the sum certain is secured by a deed of trust on the property. Both percentage and sum certain settlements may lend themselves to buy outs. This is accomplished by the party desiring the house to finance it and use the proceeds to pay off the other party’s interest.
When the house has occupants and it is clear that it must be sold, the rights and responsibilities of the occupants must be addressed. The occupants are usually given a period of time, maybe 45 days, to move. Sometimes the occupants are paid some incentive to move, such as moving expenses or foregone rent.
Experience teaches that practical arrangements are critical to the resolution of house disputes. Distrust between the parties is high, and enforceable settlement obligations are essential. Creative resolution is indispensable in solving house beneficiary disputes. It isn’t as though a bank account can be split.
Retaining or losing the family home is understandably deeply emotional, and these emotions constitute a major part of maneuvering toward resolution in trust beneficiary house disputes.
Hackard Law takes significant estate and trust litigation cases where we think that we can make a significant difference and there is a wrongdoer who can be made financially accountable for their wrongdoing.
We litigate in most of California’s large urban probate and civil courts, including those in Los Angeles, Orange, San Mateo, Santa Clara, Alameda, Contra Costa and Sacramento. If you would like to speak with us about your case, then call us at Hackard Law: (916) 313-3030. We’ll be glad to listen to your story.