questions & answers

Question: My grandfather is 91 and not expected to live much longer. He has a house valued at 60K but he owes 50K on it. The house is deeded to "the trust of..." Who gets the house upon his death and also, who is responsible for maintaining the payments? I am the executor of his will and current POA for him but there is no special provision regarding real estate. He does have a trust set up and we only have the "abstract of trust" that states who the trustee is upon his death.

Answer:

When property is deeded to a trust, it is no longer the property of the person who gave it to the trust.  If the house is deeded to the trust, it is trust property.  Therefore, the death of the person who gave the property to the trust will not affect the ownership of the property.  The property will then be governed by the terms of the trust.

Whether property that has been deeded to a trust can be reached by creditors will generally depend on whether the trust is revocable or irrevocable.  A.R.S. 14-10505.  If the trust is revocable, that means that the person who created it, known as the "settlor," has the power to terminate the trust and take the property back.  If it is irrevocable, the settlor cannot take the propert back from the trust.  Under Arizona law, a creditor can usually reach property in a revocable trust, but not an irrevocable trust.  However, it is important to remember that the law related to trusts is very complex.  Only a licensed attorney who is given the opportunity to review all relevant facts can determine whether property will be subject to the claims of creditors.