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Can I, as the trustee of an irrevocable trust, get a home equity loan against my mother's house?

New York, NY |

The deed has been changed so that the trust is the owner. The amount I'd need is less than I would inherit at the time of her death. In the trust it states that mom can live there until her demise.

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Attorney answers 2


the answer depends on a number of factors, including: does the trust give you the authority as trustee to mortgage the property; locating a bank that will make such a loan; the purpose of the loan. you should consult with an attorney to review the trust provisions and the planning involved.



I am in a similar situation and have spoken to two attorney's both of whom believe that the trust allows me to borrown, and I have permission of the other beneficiaries. I haven't been able to find a bank willing to discuss it because it is a trust.



Sorry I hit the button too early. Do you have any idea of a bank that has in the past leant to irrevocable trusts with life estates? The trustees have decent credit and income to cover the loan whic would be for less than half the value of the home.


Assuming the trust allows such transactions (mortgages) then you will be able to once you find a willing bank and show that the trust has sufficient ability to pay the loan. However, be careful with this transaction. I am not certain what you are seeking to use the loan proceeds for but it sounds from your questions that you want to use the trust property to get a loan for your personal use and not for the trust or your mother's use and benefit. It sounds as if you may be the residuary beneficiary for the trust to inherit after you mother passes away. However, that does not mean that you should the trust property to benefit yourself while she is still alive. That may lead to impropriety and self-dealing, especially if there are other beneficiaries who may object. At the very least, your mother would need to consent as failure to repay the loan could lead to her losing her place to live. Remember, as trustee you have a fiduciary duty to all beneficiaries and should not favor any one or class over another. You suggest that the amount you need is less than you would inherit, which is what suggests to me that you want to use the proceeds personally. Consult with a local attorney to see what the trust is allowed to do and then verify if your intended use for the funds falls within those limits. If any part is to be used by you personally, then you may want to hire two separate attorneys; one to represent you as trustee for the trust and another to represent you personally in case any other beneficiaries disagree with your intended use of the funds.

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