If a Trustee mortgages a house that is trust property, do they have the right to keep distributions of income from rent?

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If a Trustee mortgages a house that is trust property, do they have the right to keep distributions of income from rent?

Do they have the right to keep such distriibutions if the Trust document states that it should be paid out to the beneficiary to use for paying for the upkeep, taxes and mortgage on the house?

Asked on July 4, 2013 under Estate Planning, Illinois

Answers:

Nathan Wagner / Law Office of Nathan Wagner

Answered 8 years ago | Contributor

It all depends upon the terms of your trust. Generally, the trustee can use the rental income to repay the mortgage loan, make other payments for the property (such as taxes), and to pay the trustee's fee for serving as trustee. So, the trustee can usually use the trust's income for the trust's purposes before making distributions to the beneficiaries. 


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