home is in an irrevocable trust

UPDATED: Oct 1, 2022

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home is in an irrevocable trust

Is it possible to get a home equity loan on a home that is in an
irrevocable trust, and the only way to guarantee the loan is what money I
receive from a pension and social security. I reside in New York

Asked on December 1, 2017 under Estate Planning, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

The trustee can potentially take out a loan secured by the property, IF doing so is in keeping with his power/authority (the trust lets him do this), is in keeping with the instructions of the trust or at least not against them, and is in the interest of the beneficiary(ies). The trustee may take out loans and encumber (e.g. with a mortgage or security interest) property if the trust lets him/her do this and if doing so is in line with the trust's purposes and the best interests of the beneficiaries. In this case, it is the trust, through the trustee, taking the loan and then using it for trust purposes.
But a beneficiary cannot take out a home equity loan on property in a trust since the beneficiary is not the owner of the property: it is owned by the trust. Only the owner(s) of property can take out a loan on it.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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