My family trust has a home I would like to purchase in Orange County, CA. I am looking for help to come up with few strategies to entice my family to sell to me vs. them throwing up on MLS. Hoping a seasoned RE investor or Lawyer can point me in the right direction.
Well, "how" you COULD do it is a very different question from how to entice your family to agree to it... Depending on how the trust is written, who's trust it is, etc. it's usually not too difficult to transfer the property to a family member. You can often do this without triggering a reassessment of value too, depending on the use/occupancy of the home.
If your family is trying to obtain a fair market price, you could potentially just buy the property from the trust and avoid many of the selling costs associated with selling it on the open market/MLS (agent commissions, photos, marketing, etc.). I've also had clients buy the property for a pro-rated amount based on trust beneficiary status when this is happening due to the passing of the trustor.
For example: Fair market value of the house is $500k, owned free and clear, and you are one of 5 beneficiaries of the estate. You apply your $100k worth of inheritance toward the price and just buy the house for $400k paying $100k to each of the other 4 beneficiaries (overly simplified math obviously, but you get the idea).
There could be important legal aspects to any particular trust that I'm not accounting for as well obviously, so I would still suggest consulting a real estate/trust attorney at minimum.
Need more details... is the person who created the trust alive or deceased? Are you planning on purchasing to move into the real property or to use as a rental? Is the trust the largest asset in the trust or are there significant other assets? Are you a beneficiary of the trust? How is your relation with the family members? Who is the trustee?
*This post does not create an attorney-client or CPA-client relationship. Readers are advised to seek professional advice.
The trustor is my grandmother. She is 99 years old and probably last year living. My aunt is the executor and the property is probably the most valuable asset they have. There are 4 total beneficiaries (kids) and I am one of the beneficiaries son (grandson). It's worth about $1MM
I am looking for a few options to present a sale to all of part or one of them. One idea I had was to have my father (one of the beneficiaries) not take his 25% of the property inheritance, and keep the equity at lets say 25% and hold. I buy the property for $750k and make a deal to refinance after 5 years and pay my father off at the future value at 25%. Assuming he doesn't need the money. (I have one brother so there would need to be some agreement and language that if my father passed unexpectedly, that a percent would be as payout and not actual ownership percentage of the property, etc.). I am assuming that since my father would be on title, he has protection to get paid back his 25%. I also am assuming when we refinance to pay off his 25% that income would be tax free since its refinance and not counted as income? I know I would need to double check this.
If all beneficiaries need the money, and therefore need to sell the house at fair market value, i'm hoping there are other options to pitch that again would make this win win for all. Using a family friend agent goes without saying. I'm sure we all can find someone willing to help navigate the paperwork and represent both sides for a discount.
Let me know if anyone see's anything else or has other ideas. I appreciate you all jumping in and taking the time to respond. Much appreciated.