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Trust issue, Chapter 7
Todd:
You're the client's lawyer, go read the cases and make sure you explain the cases to your client so the client understands the play before you file the case.
d
________________________________
To: cdcbaa@yahoogroups.com
Sent: Sunday, January 8, 2012 6:29 PM
Subject: [cdcbaa] Re: Trust issue, Chapter 7
Oh wow, you just made my night....I think... so even though house is worth a chunk, and in my guy's name, he's safe? No issues? I gotta go read 363!
Thank you!!
>
> Trustee can't sell house with a life estate. 363e requires adequate protection of the life estate and that's impossible.
>
> D
>
> Sent from my iPhone
>
> On Jan 8, 2012, at 4:59 PM, "t_mannis" wrote:
>
> > I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
> >
> > PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
> >
> > In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
> >
> > For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
> >
> > Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
> >
> > Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
> >
> > How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
> >
> > You have 60 minutes. No talking. No chewing gum.
> >
> > PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
> >
> > Todd Mannis, Esq.
> > Calabasas, California
> >
> >
>
The post was migrated from Yahoo.
See 541(d) too
Sent from my iPhone
On Jan 8, 2012, at 6:29 PM, "t_mannis" wrote:
> Oh wow, you just made my night....I think... so even though house is worth a chunk, and in my guy's name, he's safe? No issues? I gotta go read 363!
>
> Thank you!!
>
> --- In cdcbaa@yahoogroups.com, Dennis wrote:
> >
> > Trustee can't sell house with a life estate. 363e requires adequate protection of the life estate and that's impossible.
> >
> > D
> >
> > Sent from my iPhone
> >
> > On Jan 8, 2012, at 4:59 PM, "t_mannis" wrote:
> >
> > > I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
> > >
> > > PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
> > >
> > > In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
> > >
> > > For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
> > >
> > > Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
> > >
> > > Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
> > >
> > > How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
> > >
> > > You have 60 minutes. No talking. No chewing gum.
> > >
> > > PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
> > >
> > > Todd Mannis, Esq.
> > > Calabasas, California
> > >
> > >
> >
>
>
See 541(d) tooSent from my iPhoneOn Jan 8, 2012, at 6:29 PM, "t_mannis" <toddlaw@dslextreme.com> wrote:
Oh wow, you just made my night....I think... so even though house is worth a chunk, and in my guy's name, he's safe? No issues? I gotta go read 363!
Thank you!!
a>, Dennis <easky1@...> wrote:
>
> Trustee can't sell house with a life estate. 363e requires adequate protection of the life estate and that's impossible.
>
> D
>
> Sent from my iPhone
>
> On Jan 8, 2012, at 4:59 PM, "t_mannis" <toddlaw@...> wrote:
>
> > I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
> >
> > PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
> >
> > In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
> >
> > For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
> >
> > Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
> >
> > Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
> >
> > How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
> >
> > You have 60 minutes. No talking. No chewing gum.
> >
> > PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
> >
> > Todd Mannis, Esq.
> > Calabasas, California
> >
> >
>
The post was migrated from Yahoo.
Oh wow, you just made my night....I think... so even though house is worth a chunk, and in my guy's name, he's safe? No issues? I gotta go read 363!
Thank you!!
>
> Trustee can't sell house with a life estate. 363e requires adequate protection of the life estate and that's impossible.
>
> D
>
> Sent from my iPhone
>
> On Jan 8, 2012, at 4:59 PM, "t_mannis" wrote:
>
> > I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
> >
> > PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
> >
> > In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
> >
> > For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
> >
> > Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
> >
> > Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
> >
> > How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
> >
> > You have 60 minutes. No talking. No chewing gum.
> >
> > PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
> >
> > Todd Mannis, Esq.
> > Calabasas, California
> >
> >
>
The post was migrated from Yahoo.
Trustee can't sell house with a life estate. 363e requires adequate protection of the life estate and that's impossible.
D
Sent from my iPhone
On Jan 8, 2012, at 4:59 PM, "t_mannis" wrote:
> I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
>
> PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
>
> In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
>
> For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
>
> Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
>
> Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
>
> How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
>
> You have 60 minutes. No talking. No chewing gum.
>
> PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
>
> Todd Mannis, Esq.
> Calabasas, California
>
>
Trustee can't sell house with a life estate. 363e requires adequate protection of the life estate and that's impossible. DSent from my iPhoneOn Jan 8, 2012, at 4:59 PM, "t_mannis" <toddlaw@dslextreme.com> wrote:
I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
You have 60 minutes. No talking. No chewing gum.
PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
Todd Mannis, Esq.
Calabasas, California
The post was migrated from Yahoo.
I feel like this is a bad law school flashback to my least favorite subject... I've been researching this for the past couple of days but have found lots of conflicting takes on it, although more negative than positive.
PC has some serious business debt for which he's personally guaranteed all of it - we're talking over half a mil. He NEEDS to file. Moreover, he's in perfect shape otherwise, majority of debt is clearly business debt, no means test, etc.
In 2004, his parents set up an IRREVOCABLE trust, we'll call it the Smith Premises Trust. The trust asset is parents house, free and clear, worth a chunk. They transfer it to my potential client, Smith Jr., via quitclaim in 2004, as Trustee of the Smith Premises Trust, reserving for themselves a life estate. They are in their 70s, ok health. The beneficiaries are my client, Smith Jr., and his brother, Smith Jr. #2, 50% each per the will referenced in the trust.
For whatever it would be worth, there does not appear to be any sort of spendthrift provision in the trust, which strikes me as bizarre; whether it would be effective in the BK or not (debtor/trustee has dominion and control), you'd think the attorney who prepared it would have at least included one out of an abundance of caution, but I sure as hell can't find it.
Again, the trust is irrevocable, yet it does reserve to the grantors (parents) a limited power to change the beneficiaries (which I didn't even know you could do in an irrevocable trust).
Question, obviously, is to what extent the trustee can go after it. At fisrt glance, my initial thought was well, ok, parents have a life estate, how could a trustee sell that, but given their age, its conceivable the trustee could find an investor who will pay at least something, far below the full amount of the property, and be willing to wait for the life estate to end, thereby getting a hell of a return....
How about the fact that parents can change the beneficiaries? Assume they make brother the only beneficiary, and leave potential client out. Nothing fraudulent there if they have the power to do so, but then client is still the owner, albeit as trustee, pursuant to the quitclaim deed. Does that help? And what of brother's interest as beneficiary? Would that, along with the life estate, serve to make it even more unmarketable, or is that interest simply a casualty of war if he proceeded with filing?
You have 60 minutes. No talking. No chewing gum.
PS In all seriousness, I think he's screwed, but any help at all would be greatly appreciated.
Todd Mannis, Esq.
Calabasas, California
The post was migrated from Yahoo.