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Richard, Attorney
Category: Estate Law
Satisfied Customers: 53705
Experience:  29 years of experience practicing law, including tax and estate planning.
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My husband put hs home in an irrevocable trust with his son

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My husband put hs home in an irrevocable trust with his son and I as co-trustees. He has passed away and I would like to refinance or know my options as I am the person making enormous payments on this property and am quickly running out of money. I have called some refinancing companies and they said they cannot do the refi with this kind of trust. If I stop making payments what might happen?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. What do the terms of the trust provide regarding the home upon your husband's death? Is the trust named as the borrower of the mortgage? Is the loan the original loan obtained to purchase the property? If the trust is not the original borrower, did the original lender consent to the transfer of the property to the trust? Is the house value less than what is owed on the mortgage? I'm sorry for so many questions, but I want to be able to provide your accurate and useful information. Thank you!
Customer: replied 3 years ago.

Upon his death it was put from a revocable into an irrevocable trust with me and my stepson as co-trustees. The trust is named the Michael P. Rushing trust and it is the owner of the property. The loan is the original loan taken out in his name only. The original lender may not be aware of the trust. My husband's attorney told us not to tell them he had passed, since they might want to completely make a new mortgage with us as the borrowers, and this would not have been approved. The house has equity in it.

Thank you so much for following up. Just a couple more questions...are you the beneficiary of the trust? And, now that he has died, does the trust provide for the co-trustees to distribute trust assets to the beneficiaries?
Customer: replied 3 years ago.

Yes, my stepson and I are co-beneficiaries (equally) of the trust. Also, the trust provides for the co-trustees (his son and I) to distribute trust assets to the beneficiaries.

Thank you!! Since the property has equity in it, you don't want to let the property go back to the bank. What you want to do at this point is to distribute the property to you and your stepson in undivided 50% ownership interests. That will allow you to refinance it. As a 50% owner, your stepson is obligated to pay for 50% of the costs involved. If you cannot get this refinanced on terms that the two of you can afford, you would want to sell it, pay the mortgage, get reimbursed for any amounts you've paid toward costs, and divide the remaining proceeds with him. If you can afford to refinance on terms that work, the ownership in you and your stepson, rather than the trust, should allow you to obtain such refinancing. If your stepson cannot afford to participate in the ongoing costs, he needs to sell his interest in the property to you. He is not entitled to the benefits of ownership if he cannot afford to accept the burdens.

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