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| Trustee wished to refinance property held in an irrevocable trust, but could not get financing with trust as the owner. Trustee distributed out the property to the underage (for trust purposes only) beneficiaries, granting them title to the property. It is now being refinanced. Do we have a distribution/contribution ownership problem or can we assume this distribution was for convenience only in order to refinance. After the loan closing, the property will then be "contributed back" to the irrevocable trust.....
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Power Member
Group: Forum Members
Last Login: 1/6/2010 6:00:00 PM
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I've never researched this question, but I also feel you can't assume this is a "convenience" transaction. For example, if the trust has a spendthrift provision, and one of the beneficiaries goes bankrupt, I think the creditor would have a better chance against the trust property than if the trustee did nothing.
John Jacobson
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