Oftentimes a house is a person’s most important and valuable asset and can be a major reason for a homeowner to create a trust. When the homeowner dies, responsibility for the home falls to the trustee whom the homeowner named in the trust. The trustee’s responsibilities are based on the principle that he must act reasonably. Although what is, or is not, reasonable depends on the circumstances, the powers of a trustee with respect to a deceased homeowner’s house are usually very broad.
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A trustee may have to deal with a few initial matters upon the death of the homeowner that are sometimes easily overlooked. If the homeowner was elderly, ill or had physical or mental challenges, she may have been receiving some type of home service, such as regular visits from a home health agency or a regular delivery of food. The trustee should cancel those services as soon as reasonably possible. If the homeowner lived alone, the trustee should consider installing a timer for at least one light in the home that will turn the light on during evening hours to discourage a break-in. Mail should be redirected to an address used by the trustee and the trustee should cancel any newspaper delivery service.
Using Trust Property to Pay for Home Expenses
It is important to note that the trustee’s duty exists in her capacity as trustee. She is not obligated to pay for costs associated with administering the trust out of her own personal funds. This means that the trustee may use the deceased homeowner’s money to pay for trust expenses, including those expenses attributed to the home. If the homeowner did not leave enough cash to pay the expenses, the trustee may sell other trust property to generate the necessary funds.
Maintenance and Repairs
An important obligation of any trustee is to collect and preserve the trust property. This obligation exists even if the trust document does not explicitly provide so. The obligation means that the trustee should immediately take possession of the property, assume control over it, and protect it. When a trustee must deal with a deceased person’s home, this obligation means that the trustee must perform any reasonable maintenance and repairs. This responsibility stems from the trustee’s obligation to protect the home for the beneficiaries. For example, because a water leak in the roof could have serious consequences on the value and habitability of the home if left unattended, the trustee must repair the leak unless it would be unreasonable to do so, such as if the house was condemned and had not been torn down yet.
Taxes and Insurance
Just as the homeowner had to pay property taxes and property insurance, so too must the trustee. This obligation also falls under the general duty of protecting the trust property. The county tax assessor’s office can place a tax lien on the property and may even have the property sold if the taxes are not paid. If the trustee fails to pay the property insurance and the house burns down, for example, the trustee can be liable to the beneficiaries of the trust for the equity in the home.
Renting the Home
A trustee may rent or sell the home if doing so would be reasonable under the circumstances. Assume, for example, that the trust instructs the trustee to give the house to the deceased homeowner’s son, but the son is only 15 years old when the homeowner dies. Because a minor cannot legally own valuable property, the trustee cannot grant the home to the child. The trustee may decide that it would be a good idea to rent out the house until the child turns 18 because the property would generate income for three years.
Selling the Home
As with renting out the home, the trustee may also sell the home if doing so would be reasonable under the circumstances. In the above example, assume the value of the property is steadily declining and the trustee is concerned there will not be any equity left in the home for the homeowner’s son after three years. In that situation, the trustee may decide to instead sell the home and give the homeowner’s son the money when he turns 18. As with renting out the home, the trustee should review the trust document carefully to determine whether the homeowner has provided any specific instructions in this situation.
Distributing the Home to the Beneficiary
The primary purpose of a trust is to distribute the trust property to the intended beneficiaries according to the terms of the trust document. It is the trustee’s obligation to make these distributions. When the conditions of the trust document are satisfied, the trustee is free to distribute the house to the named beneficiary. Doing so is by way of a deed with the trustee signing as the grantor.
References & Resources
- The Executor’s Guide: Settling a Loved One’s Estate or Trust (4th Ed.); Mary Randolph
- Examples & Explanations: Wills, Trusts, and Estates (3rd Ed.); Gerry Beyer
- Comstock/Comstock/Getty Images