Can an irrevocable trust take out a loan in california?
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Lending money to an irrevocable trust is possible under three general conditions: Real property held in the trust are used as collateral for the loan. Successor trustee must approve of the loan, and the beneficiaries must give consent.
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An irrevocable trust can obtain a loan from North Coast Financial if the trust owns California real estate. The trust must allow for the successor trustee to obtain a loan against trust assets for the benefit of the trustee or beneficiaries. The loan will be made directly to the trust.
Even with the specific trust language that makes it irrevocable, a trust in California can still be drafted with certain provisions that allow for modifications under special circumstances. For example, you can have a trust protector which is a disinterested fiduciary, such as an accountant or attorney, who has limited management authority.
Can an irrevocable trust get a loan? An irrevocable trust can obtain a loan using real estate assets as collateral. The irrevocable trust loan would need to be approved by the successor trustee. The successor trustee will also need to review and sign various loan documents and disclosures.
However, while the mortgage document may preclude transferring the property back into the revocable trust, I’ve never actually seen anyone have a problem with doing so as long as they keep up their mortgage payments. So, we advise clients they can transfer their home back into their revocable after taking out the home equity loan.
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