I am the trustee of a trust where my dad, the grantor and trustee resigned to me. He lives now in an assisted living facility and wants his primary home rented out. Can I take out a home equity loan on the house (in the trust) to improve it and rent it?Also, my dad has alzheimers so he can not sign any legal documents. However, can I use his income and name for the credit line since it's his property? Plus, I'm on disability so I don't think my income would suffice,
It depends on the powers granted the Successor Trustee in your Dad's trust.
When your Dad passes the beneficiaries will be evaluating this transaction as to its appropriateness. Unfortunately your Dad has Alzheimer's. If the money is not needed for your Dad's care, you may want to consult with an attorney before taking any further action.
It is recommended you consult with an attorney
You may be able to, but it depends upon the terms of the trust. I suggest you speak with an attorney - the costs of that discussion will be born by the trust, and protect you as trustee.
Sorry to say this is as stated by others. It depends on the terms of the trust
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I agree with attorneys Santaella & James, and would just like to add that you will probably have to record your POA in the county where your dad's property is located because taking out a HELOC involves encumbering real estate triggering the requirement to record the POA.
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Please see an Elder Law Attorney because that kind of an Attorney can provide legal advice if the transaction doesn't work out, so that neither party's potential for receiving public benefits is unduly disturbed.
Also, since he is not living in the house, if you were in Los Angeles, the traditional bank-type lender would want you to take the house OUT of the Trust; since he has AZ, you can't do that. Therefore you may need to go to a different kind of lender, but the terms would be different and the interest rate would be higher.
I suggest making a budget of what you think needs to be done and then shopping the loan amongst persons who buy and sell mortgages/promissory notes; you can also check at www.closeprobate.com to see if that is the kind of loan you are seeking.
Finally, whatever you decide about the loan, before you sign any papers with anyone, I strongly recommend that you have them reviewed by an Elder Law Attorney so that you are fully and completely informed: if a Tenant moves and you cannot re-rent it, how will you pay the loan off?,
An Attorney consultation ~ with candor and confidentiality ~ would result in legal advice that fits the specific situation [facts and documents (if any)].
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