If I Put My House in Trust, Can I Still Withdraw From My Home Equity Loan?

I have a mortgage and a home equity loan outstanding. If I put the house in an irrevocable trust, can I still withdraw from my home equity loan, or will only the trustee be able to make withdrawals?

If you transfer your home to an irrevocable trust, the trust will be the owner. Doing so may technically violate the terms of the mortgage and home equity loan, making them both immediately payable. However, if you continue making the monthly payments. in all likelihood the bank will be none the wiser. In terms of withdrawing additional funds from the home equity loan, you (or someone you hire) would have to read the fine print to be sure, but again if no one is the wiser, you can probably do so. That said, doing so may undermine the purpose of the trust depending on your purpose for creating it – usually Medicaid, creditor protection or estate tax planning. To argue for these purposes that you no longer own the property but to continue to withdraw equity seems a bit inconsistent.

 For more on trusts, click here and here.