Does a living trust require some sort of maintenance/updates over the years to remain in effect?

So here's a follow-up: We got the appraisal this week, and I got an explanation of the NOVAD RM statement. The payoff amount on the RM is so close to the appraised value of the home that there would be little or no profit from selling. You were right, igloo, this woman has been very lucky in this regard! It looks like at this point is more feasible to keep MIL in the home as long as possible. We'll work on finding more sources of help with caregiving duties. I really don't know from where that might come. There is no more $$ except her $9000 savings. We talked before of finding someone to move into the home to be there for overnights, but I'm not clear how to pay a lower rate than the daytime CG and remain a legal and responsible employer in CA. It seems that there would be some allowances for giving an employee a place to live in exchange for simply being available should MIL need help during the night. Of the many times SIL or I have stayed overnight, she has called on us maybe once or twice. At this point it's a precaution mostly. Is there a way to "rent" out the spare room to someone who would agree to spend nights there and share in dinner and maybe breakfast? (free room and board?) I'm so disappointed! I'm going to hunt up the Living Trust document this week and explore its status, as well as the POA, and work on adding DH and myself as POA.

Reverse mortgages seem great, but when ir if you need care, abd have to sell house there may not be any equity left.
Heirs may have to take out a mortgage if they want mons house.
If there is equity, yes it goes to the heirs.
The bad part is interest compounds on top if interest mo to, there are additional expenses such as the annual inspection. Miss the return of the homeowners questionnaire annually, you will find yourself in foreclose.
There are upfront costs as well.
Better to take out a hone equity where you pay interest only.
Depending on interest rates I will give you an example.
Borrow $10,000 and pay around $32 a mo. for interest. Nothing on principle. That is paid iff when you sell, or you can add extra pmts to reduce principal thus reducing interest payments.
There is an annual fee if around $50 a year.
DO NOT TAJE OUT A REVERSE MIRTGAGE. SO MANY HAVE COMPLAINRD
I owned a mortgage Co. And taught finance at a college.
Tom Selleck is W r o n g ... but then he will never need or lack in money for retirement

Pinky, got to tell you your response has me cracking up…. I’ve got to hand to to your mom, her RM has actually worked in her favor $ wise.
Shes outlived her “Modified tenure w a LOC option” RM. LOL 😂 😂 Someone buy that woman a lottery ticket, she’s born lucky!

Reason it’s at HUD & it’s servicer - NOVAD - is bc her RM has gone beyond the 98% & there is no equity in the property. (That’s its been sold around like a old single stinky sock from 1 servicer to another, to me, shows it’s been a bad acquire by servicers & last one offloaded it to NOVAD). NOVAD is the end stage servicer for HUD for HECM (federal lending guaranteed RM) & for FHA lends that have gone beyond bad for the original bank/mortgage co.
NOVAD has a heavy paperwork system & it has outside contractors that do property appraisals on the loans. NOVAD imo seems to be geared to do foreclosure on RMs but workarounds on FHA loans.

I’ve been on this forum a long time, I’ve got to say this is the first time ever someone has posted on a RM that returned to HUD / NOVAD.

have a couple of suggestions for y’all:
- do NOT contact NOVAD just yet but instead…
- find an elder law atty asap (mom pays) & be upfront that mom has old RM, might be an LT & family is wanting to sell house, as atty will need other legal - real estate atty - in on paperwork. Also atty does fresh POD and a Will as it seems neither exists, right?
- at a minimum I think 6-8 mo this to get this resolved. If mom can hold out at her home thats ideal. But if not, and you or Sissy need to front $ for moms care, get atty to do paperwork that it’s a loan to be repaid from mom’s assets or Estate.
- look at RM on the selling it or the 12 mo part, does it require a notification to servicer? This could be sticky as her original servicer is long gone and too is all the others afterwards. It’s now NOVAD. Discuss w atty as to how that needs to be done & atty does it.
- be Nancy Drew and find that Trust paperwork. Beyond mucho importante cause if house is the asset of LT, you or Sis will need fresh Certification if Trust completed to give you or Sis Trustee authority to do things. It would prob be a fresh Trustee of Trust document. Not a DIY but needs atty to do this. If there is not one to provide to NOVAD immediately, they will likely foreclose.
- pay for pull on the Title. Your atty can do this, but you can do it as well. Moms technically does this and her $ pays.

Mom has 9K, she needs to pay for things so no “self dealing” issues.

About Realtor & their “appraisal”, is Realtor actually doing true appraisal with appraiser license # & their state of CA seal attached to report? OR it is actually Realtor doing “listing comparable” document. If Realtor MLS, they can do a comps document easy peasy & based on what other properties in the zip or similar footprint sold for. NOT the same thing as a property appraisal; it’s more a wish price that property might sell for & could be way way more if comps in moms hood have flips, Reno’s or new builds atop tear downs.

Appraisal mucho importante as it allows mom as RM holder or their heirs to buy HECM property at that value or 90/95% of RM balance; whichever is lower (although you have to have the $ to do this asap). Mom supposedly balance $417k, if property appraises at $590k, family could buy it at 90/95% of RM balance…. a great deal. But if appraisal comes in at 350k, the best would imo be you pack up stuff mom / family want to keep, estate sell other stuff & let NOVAD deal with home.

It’s an unusual situation. Strange times for home & car buying (just bought my car lease & value is 11k over end of lease $, this is not supposed to happen, who knew!)

Really Pinky, imo, u & Sissy cannot DIY this, so meet with attys till u find one that understands mom’s unique situation. And pls let us know what happens w NOVAD. Appreciate it!

A living trust can be changed by the person who created it and best to have an atty. But those who have POA & Appointed to handle finances n medical decision must do so according to. moms decision. Only mom if of sound mind can chg.

The trust, if still in effect, would cover all assets and accounts that were put into the trust. If the trust was never funded, then it will be moot. But if any of the bank accounts or investment accounts are named, then the provisions of the trust would apply. Typically people put their residences in the trust too. It sounds like it was possibly created but never used. Most trust documents include a POA designation for financial and medical purposes. I would try to find a copy of the trust and consult with an attorney now so that you don’t have conflicting estate directives in the future.

trusts do need periodic review and updating, but it is most important, as others have suggested, that you talk with an estate attorney to find out what- if anything - needs or perhaps should be done. This will avoid possible potential problems at a later time. I would do it ASAP while your MIL is still able to make decisions that would not later be challenged

IMPinky: Please retain an elder law attorney for your queries.

Please reach out to the organization that holds the family trust account. Find out the beneficiaries and if there is a balance. Ask for a copy of the "rules" that this account functions under. Talk with SIL hubby and anybody else that might be a beneficiary about what to do with this account.

So MIL did a Reverse Mortgage (RM) on her home, right?
The home is an asset of the Living Trust, isn’t it?
Is the home the only asset in the Trust?

A RM and a LT can coexist, but the RM has the priority position on ownership when your MIL dies or moves out of the home and causes the RM to become due in full usually 30 days after RM sends notifications. There will be paperwork explicitly describing the LT/RM relationship and that RM is secured lending and priority. If you don’t have a copy of the RM, get one.

Are y’all kinda expecting to inherit the home? If so, I’d suggest you find out an estimate on what $ amount repayment would be needed to the RM if say MIL died this summer. I’m not being morbid but the RM agreement (HECM) is very specific as to payment in full. It could be a significant amount of $ paid in a narrow period of time & you imo need to have a plan as to where your are getting your cash from on short order if you want to acquire her home.

You mentioned probate……. so she’s transferred her car to her son & has her home in a LT / RM and no other investments & no other property?
If so, imo I don’t think you’d need to have probate concerns. Her bank accounts in her name could go POD so bypasses probate and life insurance have beneficiaries named so too bypasses probate. Could SIL already be POD on her bank accounts as she is already a signatory on them? ((Or if they are titled in the Trust, they pass outside of probate.)) Contents of the home could go via estate sale. Thetes nothing needing probate.

Please realize the RM is not going to let family have the property sit around for months; RM is going to acquire it asap as is their right for secured lending. That she was paid over 16 years means she got a Line of Credit RM, which tend to have lower interest rates on the mortgage. Still could be quite a bit owed to RM. If her neighborhood has had huge huge increases in value, actually buying it from the RM could be worthwhile. It’s strange times for property value.

Trusts can defund. You want to have a planned defunding and have the paperwork done by an atty if possible. But I’m guessing that she said “oh it’s no more” as she is aware that the RM is going to take over the house that’s an asset of the LT so LT doesn’t matter anymore.

Yes, go to or call/write to the company and see what is what. Your Mom will probably have to be present if it is in her name, but definitely look into it. Things like that can get forgotten and lost. If she stopped using it, sounds like there is still money there? Check it out with her permission. IF she got a reverse mortgage, she will have to pay all that back with the sale of her house when she dies. The payments were not free money-some people don't realize that.

I am DPOA and Successor Trustee for my sister. Original Trust was made in NJ in 2008. My sister relocated to FL shortly thereafter. In 2018 she experienced some severe medical issues. It was at that time I discovered I was DPOA and successor Trustee. The Trust needed to be rewritten as there were differences in state requirements. I do keep an electronic copy of the Restated Trust on my computer. Sister’s health has been deteriorating dementia progressing and it was recommended she resign as Trustee. She is in assisted living, with hospice care now. She never married so there are no dependents, just 3 surviving siblings and a fantastic friend who has been by my sister’s side for years.

Please search for your paperwork and the lawyer who prepared the Trust. It will give you needed information. Items in Trust may be protected from Probate. And remember, the POA abilities cease at death, Trustee or Successor Trustee does not.

My parents had a trust and when my Dad died I completed trust agreements with my Mom through an estate attorney. A trust simply moves assets such as the house into the trust so it doesn’t go into probate and assets can be liquidated. When written properly t the house will also move into the trust.

The lawyer did what is called a pour over of their original will naming each heir, in Moms case her children in the will and the lawyer also made sure my POA was up to date. He also said I needed to be added to my Moms bank account to keep that from going into probate.

you are right to make sure you are getting you Moms affairs in order. Make sure she has a will and make sure you research reverse mortgages. My MIL had one. She put her daughter on it but when she passes the money taken out needs to be repaid usually within a year.

my brother recently died in Florida. He had no will but had a very small amount in a checking account, a lot of stuff in a collectors store and two cars that don’t run. None of us had the power to do a thing about it. The landlord of the store gave me a hard time about rent. We paid the months rent and two of his friends moved the stuff out. The landlord kept bugging me about the cars. The probate court felt bad and told me the cars were the landlords problem. He could file abandonment of property in the court and eventually it would be his property and he could dispose of them.

I am not an expert, but have some knowledge of this. If you recieved a letter, it was likely from the Estate Attorney Firm who set it up? You would do well to contact that firm for details. Family Protection Trusts can be quite extensive and can be a very good thing from a tax prospective and protections of assets (even real estate) of the heirs and the persons who set it up originally. I would do some digging on this. Good luck.

Try to check to see if the trust is funded. Your MIL and FIL may have pulled all of the money out of it. Also do some checks of Unclaimed Property. This is usually under the official State Treasurer's office. Search for their names in all of the states where they resided. I did this when I was POA for my aunt and found forgotten accounts in more than one state.

Contact Estate Attorney. Even with names added to accounts, if not done properly the accounts can be subject to bankruptcy or law suit issues for anyone who is named on the account. How the names are added also makes a difference when it comes to probate. You are already doing the best thing for everyone by searching for all the papers while your MIL can still give insights to their locations.

What's in the trust if SIL is on the bank accounts, the house isn't in the trust, and the car isn't?

Sounds to me like it wasn't funded. Is there an actual copy of the trust anywhere? Nevertheless, I'd get a trust and estate attorney involved to make sure.

Thank you all for sharing your knowledge. This confirms what I thought, that at the very least we need to go through the files and determine where things stand. I was not comfortable just assuming it's all as it should be. SIL may be financial POA as well as medical. but the document needs to be located and read. We are not a very organized bunch and besides, MIL has never liked letting anyone look at her financials. But now she is at the point where she doesn't want to bother with it herself either. So I will be doing some pushing.

Thanks again!

As always, if you want legal advice you can rely on, consult an appropriate attorney.

First, someone (the POA?) should review all assets and see how they would be passed down: joint accounts, pay on death beneficiary designations, living trust, or will (possibly pour over will that just moves everything not otherwise specified into the living trust at death).

It is possible, but not often required, that the home was moved out the trust when the reverse mortgage was acquired. This would explain why MIL doesn't think it matters anymore. A quick check of the most recent property tax bill is a good place to start; verify by consulting the county's records (title companies may offer a complimentary brief report in hopes of getting your business if you sell). Generally, if it was moved out of the trust, it can be moved back in after the loan is set up. This could be desirable if the successor trustee might want to reclaim the house by paying off the reverse mortgage, or if there is any remaining equity that they'd like to keep out of probate.

If there is anything in the trust, it may be desirable have the successor trustee made into a co-trustee if MIL is to the point of handing off responsibilities to the POA/co-trustee. If any of the beneficiaries have predeceased your MIL or if new beneficiaries might need to be added (new descendants?) that should be updated at the same time. A really old trust might need updating for revised tax laws or incapacity language. The law office where I had my trust done offers periodic reviews without charge and has been reasonable about not suggesting unneeded work.

If there is no POA or an old POA, the sooner one is created the better. It is better to have someone who can work with the reverse mortgage holder (e.g., if MIL has to move out) rather than let the process slowly work through their procedures while charges accrue (This is important if there is any equity left.)

Another thought: one of the law firms for which I worked in the EP department provided newsletters on the various practice areas of the firm. When I retired, I signed up for the newsletters.

Occasionally notifications and advice on changing laws of estate, trust, and planning issues would be included. If the change made a significant difference in any aspect of trust documentation or trust management, the firm would recommend seeing one of their attorneys to update their EP package.

Back to the issue of updating, I think it also depends highly on the Living Trust, specifically whether it's an ongoing family issue (such as wealthy families often have) or primarily for estate planning and end of life issues.

My first and most concerning question is whether or not the Trust was funded, i.e., when assets are renamed and transferred to the Trust. This typically would include real estate and financial assets such as stocks, bank accounts, etc. The assets would be retitled in the name of the Trust.

When done properly, and depending on the assets, quarterly or annual statements would be issued, disbursements may be made (depending on Trust terms), and tax data (including the schedules to the beneficiaries) issued, and returns filed.

If the Trust was never funded, it has no assets, and doesn't have to deal with taxes on assets, or since you wrote that to your knowledge there are no assets, it woludn't be an issue b/c assets are apparently nonexistent.

As to the RM, since it's in your MIL's name, it shouldn't be considered a trust asset. However, if the house property was transferred to the Trust after it was created, it won't be covered in terms of asset distribution according to Trust terms. That could create a problem, including with the RM mortgagee.

I think what you should do is contact the attorney who prepared the Trust (after you've studied it thoroughly) and ask for a meeting to discuss the Trust assets, how to manage them, and whether or not there are other issues that should be addressed.

It's hard for someone like those posting here to give concise advice w/o reading the Trust itself.

There may be a provision though that the Settlor (individual who creates the trust) or Trustee have to provide annual statements for anyone benefits from the Trust.

What really has to be done depends so much on the Trust and its assets.

Who is the financial POA?
It sounds like there needs to be one as it is sounding like Mom is uncertain what exists and how it is held.
Someone needs to help Mom now make a list of all her assets, her accounts, how they are held (in trust? in POD account? in her own account with POA handling account?).
All the files and papers and certainly the trust need to be gone through by the family with Mom, and arranged in file. If there is no financial POA then I suggest you decide who wants to do this and get it done in attorney office. Add the POA on the account. Give Mom a private spending account of her own (5,000 or so or whatever), and the rest, accounts and bills to be handled by whomever is POA.
In doing all this you will find this Trust paper. You will read it. If she has distributed everything held in that trust already then there is no trust. But it may surprise you to find that there is something, and you need to know.