Q&A: Convincing Board to Accept a Living Trust Convincing Board to Accept a Living Trust

Q&A: Convincing Board to Accept a Living Trust
I would like to establish a revocable living trust and place my co-op apartment in the trust. This will avoid probate for my heirs. My co-op board is unwilling to agree to my request. I have not been given a reason for this. How can I convince the board to agree, as a friend of mine has this arrangement in his co-op?

—Untrusted in the Bronx

“The short answer to this question is that New York State allows a co-op board to impose any rules, conditions and restrictions they wish with respect to ownership and occupancy of an apartment,” says attorney and former Queens Assemblywoman Ann-Margaret Carrozza.

“The board's contractual basis for refusing this request is that the proprietary lease or occupancy agreement likely requires owner occupancy. By signing this, you agreed that you would remain the owner. Even though the proposed trust is revocable, it is still not you. Therefore the board can legally refuse your request—as long as the refusal is universally applied.

“That being said, an ever-increasing number of shareholders have been requesting approval for trust ownership in recent years. The advantages of trust ownership are probate avoidance, as well as asset protection in the event of a long-term illness.

“The trend is that boards are moving in the direction of allowing trust ownership.

“In the interim, it may be helpful for your attorney to reach out to the board to see if a compromise can be reached. For example, some boards I deal with allow trust ownership with respect to 99% of the co-op's shares. The remaining 1% remains in the shareholder's own name, thus satisfying the owner-occupancy requirement.

“Some boards will allow trust ownership if the shareholder executes a contemporaneous guarantee. This assures the corporation that your obligations under the proprietary lease will be honored. It is very important for an attorney to review the guarantee prior to signing it.”     

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  • Both myself and my doemstic aprtner own shares in the same coop apt.Is there a way of changing the shares to read joint tenants with right of survivorship? We wish to avoid probate should one of us predecease the other>