Can Irrevocable Trust Borrow Money on Real Estate?
Photo by Aubrey Odom on Unsplash
Question: Can Irrevocable Trust Borrow Money on Real Estate?
Can I borrow money on our house if it is in an irrevocable trust?
Response:
It could be difficult. The trust itself may or may not permit you to borrow, but banks are reluctant to loan money or take a mortgage on property in an irrevocable trust. They are more likely to do so if there is an individual who will act as guarantor of the loan and if there’s rental income to support mortgage payments.
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 it could to other beneficiaries.
Related Articles:
Can the Grantor Get a Mortgage on House in an Irrevocable Trust?
Should I Transfer My Mother’s Home to a Revocable or Irrevocable Trust?
Can I Use a Private Reverse Mortgage to Pay for My Mother’s Care?
Related Articles
Don’t know how your trust works?
Whether you’re creating a plan, managing a trust, or are a beneficiary of a trust, this book is your easy-to-read roadmap.
