Friday, October 11, 2013
Because of the high interest rates, children with access to a trust are more likely to tap into trust funds to buy a house. This alternative can buy a home outright, or prevent people from taking out large mortgages. Borrowing from a trust is easier than applying for a mortgage. Two specific trusts might be good options. The first is a Qualified Personal Residence Trust, and the other is an Intentionally Defective Grantor Trust. Regardless of the type of trust there are some important things a financial planner should consider. They are listed below:
- Documentation that indicates how much is borrowed from the trust
- Family Feuds because of multiple beneficiaries
- Tax implications
See Anya Martin Tapping the Trusty Trust Fund to Buy a House, Wall Street Journal, Sep. 19, 2013.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.