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Hi, I have a relative who wants to will his property to me and my sister, one parcel with home for her, one for me. This property is not in an expensive city, rather a semi rural area with septic tanks where he retired. He's worked hard for this and wants to see it kept in the family, and wants to make it legally binding that the land never be sold. So would he need to make an irrevocable trust? Would there be any down sides to this?
He also mentioned that having the property would be good for collateral if we wanted to get a loan to start a business, improve on the property etc. but wouldn't you need to own the land to get a loan? Wouldn't the trust "own" it? I'm guessing the "trust" is controlled by a bank or law firm??
Thanks for any clarity!
Btw, sigh... it's been hard talking to him about this. He brings it up, tells me what he wants, but when I've asked him when he's going to get this all down in writing and official, he complains about the cost of paying for getting it done! I gently let him know if he doesn't have his wished legally binding, he'll have no control. He's in good shape for an 80 year old, (yeah, I know!) but...
Hi, I have a relative who wants to will his property to me and my sister, one parcel with home for her, one for me. This property is not in an expensive city, rather a semi rural area with septic tanks where he retired. He's worked hard for this and wants to see it kept in the family, and wants to make it legally binding that the land never be sold. So would he need to make an irrevocable trust? Would there be any down sides to this?
He also mentioned that having the property would be good for collateral if we wanted to get a loan to start a business, improve on the property etc. but wouldn't you need to own the land to get a loan? Wouldn't the trust "own" it? I'm guessing the "trust" is controlled by a bank or law firm??
Thanks for any clarity!
Btw, sigh... it's been hard talking to him about this. He brings it up, tells me what he wants, but when I've asked him when he's going to get this all down in writing and official, he complains about the cost of paying for getting it done! I gently let him know if he doesn't have his wished legally binding, he'll have no control. He's in good shape for an 80 year old, (yeah, I know!) but...
If he does not have who should inherit his land indicated in a will then his land may end up going to another relative. IMHO, that is the first thing that he needs to do.
Once the word "trust" comes into play there are ramifications that must be met by the people partied to the trust and the language within the document.
The three of you need to sit down with am estate lawyer, so everyone knows the details, rights, restrictions, and process before property changes hands.
If your relative does not want to pay for it, then you and sister should. It will be cheaper to pay a lawyer now for the knowledge and details, than later once this situation turns into a mess and a lawyer is needed to fix it.
It is cheaper for a lawyer to head off a problem, than fix it, much cheaper.
It gets complicated. You not only need a lawyer, but one who has substantial experience in trusts and estate/tax law. A litigator or a GP is of no use for this.
Hi, I have a relative who wants to will his property to me and my sister, one parcel with home for her, one for me. This property is not in an expensive city, rather a semi rural area with septic tanks where he retired. He's worked hard for this and wants to see it kept in the family, and wants to make it legally binding that the land never be sold. So would he need to make an irrevocable trust? Would there be any down sides to this?
He also mentioned that having the property would be good for collateral if we wanted to get a loan to start a business, improve on the property etc. but wouldn't you need to own the land to get a loan? Wouldn't the trust "own" it? I'm guessing the "trust" is controlled by a bank or law firm??
Thanks for any clarity!
Btw, sigh... it's been hard talking to him about this. He brings it up, tells me what he wants, but when I've asked him when he's going to get this all down in writing and official, he complains about the cost of paying for getting it done! I gently let him know if he doesn't have his wished legally binding, he'll have no control. He's in good shape for an 80 year old, (yeah, I know!) but...
I don't think the bold is legally possible. He can specify that the land not be sold for the the lifetimes of the trust's beneficiaries but I'm pretty sure he can't say the land can never be sold.
Who is going to be maintaing the land 1000 years from now? He cannot prevent the land from being sold.
At some point the land will have to be sold. If he does not want to set up a trust now he can provide for one in his will. He would leave the property to the trust and the trust would provide that you and your sister could live in the homes as long as you are alive AND maintain the property and pay all taxes etc. If you fail to do this or die then the home goes to the next closest relative that is willing to maintain the property. At some point relatives will not be able to be found and then the property should be sold and the proceeds used for ????.
You will need a trustee for the trust. Since the trust will not have funds to pay a trustee I assume the trustees will be the current blood resident of each home.
Not knowing the tax status of anyone I would suggest a revocable (as opposed to one in his will) trust so the title is in the trust and does not have to go through probate. You will also get a stepped up tax basis at death. You both could offer to pay the expense of the attorney for drawing up the will and trust. I would also include a health directive and power of attorney.
Hi, I have a relative who wants to will his property to me and my sister, one parcel with home for her, one for me. This property is not in an expensive city, rather a semi rural area with septic tanks where he retired. He's worked hard for this and wants to see it kept in the family, and wants to make it legally binding that the land never be sold. So would he need to make an irrevocable trust? Would there be any down sides to this?
He also mentioned that having the property would be good for collateral if we wanted to get a loan to start a business, improve on the property etc. but wouldn't you need to own the land to get a loan? Wouldn't the trust "own" it? I'm guessing the "trust" is controlled by a bank or law firm??
Thanks for any clarity!
Btw, sigh... it's been hard talking to him about this. He brings it up, tells me what he wants, but when I've asked him when he's going to get this all down in writing and official, he complains about the cost of paying for getting it done! I gently let him know if he doesn't have his wished legally binding, he'll have no control. He's in good shape for an 80 year old, (yeah, I know!) but...
I'll share a funny but sad (or sad but funny or just sad) story about someone else who put their land in some type of irrevocable trust with the provision that the land never be sold. Years & years ago they were putting a major road past my hometown (it is now an interstate highway). The engineers planned out the best route and then started buying up the land need for the new road. Right in the middle of the proposed highway was a piece of land that had some type of provision that it never be sold. The owners at the time wanted to sell and were offered a generous amount of money but the trust/will/whatever would not allow it to be sold.
Apparently there was no way around this impasse and the state had to make a "jog" in the road to bypass that land. Well, the state had the last laugh. Since the piece of land was so close to the new road and in sort of an unusual position, it couldn't be used for anything. The owners, and future owners, in perpetuity could not build a house, they could not use it for hunting, they basically could not use it for anything. But, they still owned it and still needed to pay the taxes on it.
My father told me that story. He also said that he hoped that the land that we inherited from him, and had been in the family since 1916, stayed in the family but he knew that things sometimes changed so he did not put any restriction on what we did with the land after he was dead. BTW, he died 15 years ago and many, many things have changed in just that short period of time. My siblings and I have set aside money for at least the next ten years of taxes and several of us are making provisions in our wills for money to pay future taxes after we are gone (to not put a burden on our children). But we are not saying "don't sell the land". Just my two cents.
I'll share a funny but sad (or sad but funny or just sad) story about someone else who put their land in some type of irrevocable trust with the provision that the land never be sold. Years & years ago they were putting a major road past my hometown (it is now an interstate highway). The engineers planned out the best route and then started buying up the land need for the new road. Right in the middle of the proposed highway was a piece of land that had some type of provision that it never be sold. The owners at the time wanted to sell and were offered a generous amount of money but the trust/will/whatever would not allow it to be sold.
Apparently there was no way around this impasse and the state had to make a "jog" in the road to bypass that land. Well, the state had the last laugh. Since the piece of land was so close to the new road and in sort of an unusual position, it couldn't be used for anything. The owners, and future owners, in perpetuity could not build a house, they could not use it for hunting, they basically could not use it for anything. But, they still owned it and still needed to pay the taxes on it.
My father told me that story. He also said that he hoped that the land that we inherited from him, and had been in the family since 1916, stayed in the family but he knew that things sometimes changed so he did not put any restriction on what we did with the land after he was dead. BTW, he died 15 years ago and many, many things have changed in just that short period of time. My siblings and I have set aside money for at least the next ten years of taxes and several of us are making provisions in our wills for money to pay future taxes after we are gone (to not put a burden on our children). But we are not saying "don't sell the land". Just my two cents.
Interesting story... this is all good information, he needs to know the possible pit falls.
I suppose other things could happen as well. Maybe an imminent domaine situation or theoretically what if someone doesn't want the burden of maintaining the property and just stops paying the taxes?
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