Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My extended (and probably paranoid) family are part of a property trust which has a clause preventing this. Some suspect that the trustee is trying to get around this by using a friend or lawyer.
My question is, how easy would this be to do? If he gave his friend money to buy it, wouldn't he have to declare the whole amount as taxable if he bought it from his friend? Same situation if a lawyer did this for him, correct? If this happens, how do we trace the buyer back to him?
I don't see this being done without the trustee paying a lot in tax money to a third party (and it's not like the beneficiaries would stand for someone buying the property so low under asking that it would be worth it for him.)
Yet it is a possibility he still aims to possess it. Could this be done in any way without costing as much money as I think- legally or otherwise? I'm sure we could easily trace via paperwork if this has happened, yes?
Paranoia is sometimes justified but the vast majority of estate type sales are pretty straight forward. If any of the the beneficiaries of the trust suspect that the property is not being sold at a fair price hire an appraiser or two ASAP. If the proposed selling price is even a little below the appraisals(s) simply halt the sale.
In nearly all jurisdictions it fairly easy to consult with an attorney and have a trustee removed by a judge for any kind of ethical failings and use a court appointed replacement. If there is evidence that some previous wrong doing have the trustee undue powers a neutral third party can be arranged, of course that new third party would need to be paid from the proceeds of the sale, reducing the monies available for the beneficiaries but if the selling price is substantially higher then it makes sense.
Doing these upfront or preemptively is always better than trying to "claw back" a bad deal after the fact. While law suits can be filed to contest a sale that violated the terms of a sale that is much more costly than acting now. Such and after the sale title action will also involve a whole lot more lawyers as whoever bought the property as a "straw buyer" could face criminal charges of fraud...
Last edited by chet everett; 08-27-2014 at 12:20 AM..
My extended (and probably paranoid) family are part of a property trust which has a clause preventing this. Some suspect that the trustee is trying to get around this by using a friend or lawyer.
If you're part of a family trust which prevents arms-length transactions, it sounds like the purpose is to keep the property in the family. How would using a friend or lawyer be getting around that? I don't think I understand your situation or what you're asking.
If you're part of a family trust which prevents arms-length transactions, it sounds like the purpose is to keep the property in the family. How would using a friend or lawyer be getting around that? I don't think I understand your situation or what you're asking.
They do NOT want it in the family because they want as much money as possible for it and suspect this wont happen if the trustee circumvents the "arm's length" and gets it somehow "sold to himself." He is the one in charge of making the decision to accept or deny the offers so they're afraid he'll just sell it to himself for cheap.
My POV is: 1. I don't think this would happen as it would cost a lot to the "buyer" (or whomever he gets to buy for him) after the sale from third party to trustee. and 2. It would easily be traceable so why would he risk getting sued by the rest of the trust?
So what you are saying is the trust REQUIRES and arms length transaction and you or others in the family believe the trustee is trying to get around that requirement?
If he gave his friend money to buy it, wouldn't he have to declare the whole amount as taxable if he bought it from his friend?
No, what a person pays for a property is not taxable for federal income tax purposes. It is the profit from the sale of a property which is taxable. (There may be local transfer taxes, but those usually are relatively minor.)
Quote:
Originally Posted by Utopian Slums
They do NOT want it in the family because they want as much money as possible for it and suspect this wont happen if the trustee circumvents the "arm's length" and gets it somehow "sold to himself." He is the one in charge of making the decision to accept or deny the offers so they're afraid he'll just sell it to himself for cheap.
My POV is: 1. I don't think this would happen as it would cost a lot to the "buyer" (or whomever he gets to buy for him) after the sale from third party to trustee. and 2. It would easily be traceable so why would he risk getting sued by the rest of the trust?
I'm not sure who "they" are but, oftentimes, you'd sell to an unrelated party for more than you'd sell to a family member. So I still find the circumstances confusing.
As to your point #1, a shill buyer could easily end up with no out-of-pocket costs. But, yes, the recorded documents of a sale can be easily found...but sometimes you won't know the actual principals involved if shell corporations or LLCs are used. It seems that the main issue is just to make sure that the initial sale of the property isn't to someone out of the family.
I sounds like there are complicated family dynamics in play.
So what you are saying is the trust REQUIRES and arms length transaction and you or others in the family believe the trustee is trying to get around that requirement?
The opposite of this- the trust states that it CANNOT be an arms length and family thinks the trustee is trying to get around this to profit for himself.
i.e., get into his hands without it looking like an arms-legnth transaction so he can flip it and make money above and beyond his share of the initial sale of property, which would be to him in "some way."
The opposite of this- the trust states that it CANNOT be an arms length and family thinks the trustee is trying to get around this to profit for himself.
Something is very confused here. Please look at this definition.
It sounds like the OP knows what an arms-length transaction is. It appears that some of the family apparently want to sell for top dollar (which would likely NOT be a sale to a family member) and some want to keep it in the family. The confusing part is that the Trustee may or may not be a family member and there is a lot which really isn't explained in this thread. So, yes, the entire situation is confusing.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.