Can a House in Trust Qualify for a Reverse Mortgage or Be Sold ?
Full Question:
Answer:
A trustee has the power to sell or transfer asets held in trust as described in the trust document. The trust document will provide the terms governing the sale or transfer of the assets held in the trust. While the fact that a trust may allow the sale of a home, be aware that the sale of the home may trigger a reverse mortgage loan to be repaid in full with interest.
In order for property held by a trust to be eligible for a reverse mortgage, the trust must be a revocable living trust and all beneficiaries of the trust must be qualified. Also the trust must be reviewed and approved by the lender and any changes in the trust during the term of the loan must be reviewed and approved by the lender.
Each of the trust’s beneficiaries (the people who will receive the benefits or income of a trust) must be eligible reverse mortgage borrowers. This means they have to be over the age of 62 and live in the home as their primary residence. Because the trust is not a living person, the reverse mortgage must be repaid when the person who benefits from the home (the beneficiary of the trust) can no longer occupy the home. However, contingent beneficiaries (beneficiaries who do not control the trust or receive its benefits) do not need to be eligible reverse mortgage borrowers.
In addition to the beneficiary requirements, the reverse mortgage lender will review the trust documentation to ensure that it is valid and enforceable. The lender will also look to make sure that each borrower/beneficiary can legally live in the home for the rest of their lives.
I suggest consulting a local attorney who can review the facts, documents, and tax implications involved.