‘When we found out, all hell broke loose’: My father used a family trust to secretly build a house — he rents it to his third wife’s friends at below-market rent

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My father used a family trust to secretly build a house — and now rents it to his wife’s friends at below-market rent. Is it time to sell that house now that the market is so hot, Moneyist?

I am 49 and my wife is 51. Between the two of us, we’ve managed to save and invest wisely over the span of our marriage of just 14 years. We now have between us $4.2 million invested. We both plan to work another 10 years at least in as high-paying jobs as possible and invest as much as possible. We also both stand to inherit some money, which will further help us in our goal to accumulate real wealth.

Fast forward some 15 years later. Those friends are still living in the house, paying below-market rent. We never pressed him too hard on the topic, but over the last few years we let him know our desires are for him to sell that house. Now the local housing market is white-hot, so we pressed the matter again.

Am I being greedy to demand the sale of the house and force the eviction of tenants whom I don’t know? His wife has contributed nothing financially to their marriage, and has little to no savings. I don’t see why I should tolerate the milking of my inheritance, even if I am in a financial position to do so.

Your father acted in a surreptitious and suspicious manner, and he and your financial adviser should know better than to rent a home to friends significantly below the market rate. They both acted inappropriately, secretively and, at the very best, in an ethically questionable manner. The Law Offices of Connie Yi sum up the responsibilities of the trustee more bluntly, and say he “must act with due regard for the rights and reasonable expectations” of the beneficiaries. That not only applies to who rents your father’s house, but also who he used as contractors to build it.

“I would push the father to at least obtain fair market rent, as that is the most obvious breach of his duties, especially when it is rented to a friend,” he added. “If a large percentage of the assets are invested in the house, it would not be out of line to push for its sale. “

 

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