If a house has mortgage but the co-trustee is entitled to 25% of it, how is this calculated?

UPDATED: Oct 1, 2022

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If a house has mortgage but the co-trustee is entitled to 25% of it, how is this calculated?

The house, which is in the name of the Trust, has 2 co-trustees with 1 entitled to 25% of it; the other is entitled to the remaining 75%. The latter trustee is renting/living in it and paying the mortgage and bills. It is the last item to be settled to close out the Trust. The house was purchased for $132,000 in 4 years ago, the mortgage was $106,000, and the current appraisal value is $169,000. How much is the 25% co-trustee entitled to?

Asked on May 10, 2018 under Estate Planning, Oklahoma


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The 25% vs. 75% split is calculated on the equity remaining when the home is sold after any costs of sale are paid and the mortgage paid off: nothing needs to be paid until and unless the home is sold. Let us assume it is sold today for just slightly more than the $169,000 appraised value, or $170,000. Assume 6% closing costs for the sake of this example: that is  $10,200. Assume the balance on the mortgage remains $106,000. Closing plus mortgage is $116,200. Subtract that from the $170,000 sale price: that leaves $53,800. One trustee gets 75% of that amount, the other gets 25% of it.

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