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I am a co trustee and sole beneficiary of a RLT with my mother which contains her primary residence as well as my grandmother's house which is rented. Estate value total about 500k. I want to purchase the rental house from the RLT and have the trust hold the mortage with 10 to 20-% down @ a good interest rate , say 6% over 20 years. My mother is 93 and not expected to live that long but could live for another 5. This will take the house out of her asset base. I assume I will have to pay the trust when she passes, but in the meantime, I assume the house cannot be attached to pay her medical bills. Is this correct? SHould my husband be the one to buy the house instead? Does the fact that I am co-trustee of the RLT expose me to her debts under this scenario?
Optional Information: State/Country relating to question: New York Already Tried: I NEED AN ATTORNEY WHO SPECIALIZES IN ESTATE AND REAL ESTATE LAW IN NYS. She has applied for a mortgage on her primary residence to remodel for her and caregivers. This is underway. Otherwise what I have asked is just my idea at this time.
This is an information request not an answer. Who is the other co-trustee? Does the co-trustee approve and is the co-trustee disinterested? My understanding of your question is that you want the trust to take out a mortgage and be responsible for it, but yet give up title to the property to you? Is that correct? If so, how will the mortgage be paid? Why would the trust take on a liability but give up an asset? I may be misunderstanding the question so please clarify. Thank you.DamienBosco41101.8460140046
This is an information request not an answer. Who is the other co-trustee? My mother and I are co trustees, each of whom can act independently
Does the co-trustee approve an is the co-trustee disinterested? Yes my mother would approve of my purchase of my grandmother's rental house.
My understanding of your question is that you want the trust to take out a mortgage and be responsible for it, but yet give up title to the property to you? No, there is a pending HE mortage is on her primary residence not the rental that I propose to purchse. The primary residence mortgage would be paid by the trust and she would be living there. Is that correct?
If so, how will the mortgage be paid? Why would the trust take on a liability but give up an asset? The mortgage I referred to is the mortgage I would ask the trust to hold on my grandmother's rental house whioch I propse to purchase.
I may be misunderstanding the question so please clarify. Thank you.
2 houses: (both currently in the RLT)
Have you gotten preapproval from a bank on this transaction - meaning has a bank approved of the trust as the mortgagor yet not hold title to the house? DamienBosco41101.8575295139
You must not be reading what I am writing:
the bank loan is not the issue, nor is her primary residence the issue. The bank HE loan is to the trust and the trust holds that property as well as the other rental that was my grandmother's.
THE ISSUE I AM ASKING ABOUT IS THE SALE OF THE RENTAL PROPERTY TO ME AND HAVING THE TRUST HOLD MY MORTGAGE AND RECEIVE MY PAYMENTS.
Welcome! Thank you for your question. This is a different expert.You are going to borrow money from the trust to purchase the property from the trust is that correct? Are you paying full fair market value for the property? For most creditor evaluations this would be at least tax accessed value.John Elder41101.9152472222
yes I am buying for full market value. I want to purchase directly from the trust with about 10% cash downpayment to the trust, with the trust holding the balance at about 6% interest payable monthly by me to the trust.
It is a type of breach of fiduciary duty known as "self-dealing.". However, since the other trustee and beneficiaries agree the breach is not important. What I am not seeing here is that you have really not accomplished anything. If you pay fair market value for the property then the trust is going to receive cash and a promissory not from you that is to the value of the real property. The promissory note (mortgage) can be attached by the creditors just like the houses could be. While the houses would be protected you will have to pay the full note back according to the note terms. In the future if the creditors attach the note the payments would be to the creditors. If the medical creditors you are concerned about are nursing homes then there are other protection methods that are available that will allow qualification for Medicaid, protect the homes, and keep you from being liable for the debts through the promissory note. To develop these plans you need to speak with an elder law attorney in your area.