Can Irrevocable Trust Borrow Money on Real Estate?
Can I borrow money on our house if it is in an irrevocable trust?
Probably not. The trust itself may or may not permit you to borrow, but no bank will loan money or take a mortgage on property in an irrevocable trust. Depending on the terms of the trust, you may be able to borrow money privately if you know an individual who is willing to extend such a loan.
But even in that case, there’s a further question: Once the trust is holding liquid funds, what can it do with them? If, for instance, the house were placed in the trust for Medicaid planning purposes, the trustee would not be able to distribute the funds to the trust grantor, though perhaps could to other beneficiaries.