home is in an irrevocable trust

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 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.


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