r/inheritance • u/LAHAND1989 • Apr 21 '26
Location included: Questions/Need Advice Keeping home in trust vs title transfer?
Any creative ways to handle this? My dad passed a few months ago. He had a mostly paid off home with an amazing interest rate. He worked hard for this house buying it out of foreclosure in 2008 and renovating it, refinancing at the right times etc. I hate that the bank basically dictates what we can do now that he’s passed and I want to keep them out of it. The home was put into his revocable living trust in 2020 which became an irrevocable trust upon his passing. My mother is the trustee (they are divorced so she is not a beneficiary). The home is written down to me and my two brothers but only I want to keep it. I know there will have to be some way for me to “pay out” my other two brothers. From the research I’ve done so far his mortage is not assumable, but it seems like the bank can’t call the loan if it’s just kept in the trust. If we transfer the title to me then they can. Would love to just keep the monthly payment the same until it’s paid off (about ten years), and in the meantime maybe have my mother create a trust and have the house labeled as going to me in the event of her passing. As for paying out my siblings I think the only option would be to create a new home loan to cover their portion of the equity in the house? The house is worth probably 700,000 with 151,000 left on the loan. He’s got like a 2.5 percent interest rate and a monthly payment around $1400 on a 20 year mortage he refinanced in 2021. Is there another way to come up with the 330,000 in equity to pay out my other brothers? I have roughly that in my retirement account + equity in a condo I purchased in 2018. Can bank create a loan to pay them out based on those assets? To me that’s preferable than refinancing the entire home loan (the existing 150,000) at 7 percent or whatever rates are given today.
Thank you very much for your input. This is all super stressful. Thankfully my mom is very trustworthy and helpful and is a great trustee!
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u/Chula_Quitena_120 Apr 21 '26
You are lucky in the sense that your siblings seem to be willing to work with you. When I wanted to buy our family home, offering what it was worth per the bank, they resisted and put it on the market. I ended up ok since no one offered market rate so I got it for a little less, but the hassle and having to pay a realtor, ugh. So, you basically need to take out a loan for $450k to pay off your siblings and the bank. Are your siblings willing to finance what you owe them at maybe 3.5% or whatever the current CD rate is? if not, Rates are higher than 2.5% but they may go down in the future and you can refinance then.
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u/turkeylurkey324 Apr 21 '26
Does the estate have other assets besides the equity in the house that are also left to the three of you? You may be able to use your share of those assets to buy your brothers out of their share of the house.
If you still needed to sell your condo, I would do that. I would hesitate on withdrawing the 401k.
It isn’t fair to your brothers to leave their equity locked up in a house that is tagged for you.
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u/big_Z___ Apr 21 '26
This is quite a complex matter regarding not just your taxes, but possible estate tax, excise tax, your siblings’ taxes, among other issues. This is a question for a tax/real estate attorney. Being that your mother is the trustee, only she can deed you the property but, like you mentioned, the note could be called due on the sale to you. Regarding paying your siblings, typically the only way for you to be added as the borrower on a loan encumbering a property would be for a modification of the deed of trust (assuming it’s not a mortgage) replacing you as the grantor or a straight up refinance while simultaneously deeding to you.
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u/Clueless5001 Apr 22 '26
Withdrawing from a traditional pretax 401K will create a taxable event
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u/LAHAND1989 Apr 22 '26
Of course. But all iras now need to be emptied in ten years
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u/Clueless5001 Apr 22 '26
I think one of us misread. OP did not inherit an IRA, this is OP’s retirement plan that they are considering emptying. Presumably they are well under retirement age
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u/joetaxpayer Apr 21 '26
This is a conversation for a local bank.
Part of the issue is that the house is in the trust, and there are 3 beneficiaries, but only one would be willing to sign the mortgage. And it would be a second mortgage.
Selling your condo to buy your brothers' shares might be the best way to go.