Urchina
Full time employment: Posting here.
I need some ideas regarding my MIL's house. She has come on hard times lately and cannot afford to keep making the payments on it. DH and his siblings have come into their inheritance from his dad (FIL and MIL divorced some time ago) and would like to pool their inheritances to pay off part of the mortgage. The goals are three-fold:
1. Keep MIL in the house as long as she's able to live independently.
2. Protect the house from possible creditors / bankruptcy of any one family member (MIL or kids)
3. Provide some structure to the transaction so that, if and when the house is sold later, the kids can recoup some of their investment in it.
None of us has ever done any of this before, and nobody in our families have, either. Our current working idea (which we're researching, hence this forum post) is to form some sort of family trust, with DH as trustee (he is an excellent choice). MIL would transfer title of the house to the trust, which would be held by the kids but NOT MIL, the kids would kick money into the trust, and the trust would pay off as much debt as possible. Additional influxes of cash over time would be reflected in the percentage each kid had in the trust. The trust would give MIL the sole and exclusive use of the house until her death (which is, hopefully far, far away) and MIL would be expected to maintain the house in at least its current condition, as well as make remaining mortgage and tax payments.
Then, when MIL passes, the kids can decide what they want to do -- if one kid wants to buy the others out, if the trust wants to rent the property, etc.
Anyone heard of anything like this, and are there other legal structures we should consider? One concern is that if a single kid ran into money trouble and declared personal bankruptcy or is sued in a liability lawsuit, we wouldn't want the trust exposed to that liability. How can we shield against this? Also, what happens if MIL stops making mortgage or tax payments? How would this affect the trust?
Thanks for any ideas or other places to look. We'll be talking to an attorney about this in the next couple of weeks, as well as to a mortgage broker, but I thought I'd cast our net wide for ideas first, before we start shelling out $350/hr to get "educated" by our attorney.
1. Keep MIL in the house as long as she's able to live independently.
2. Protect the house from possible creditors / bankruptcy of any one family member (MIL or kids)
3. Provide some structure to the transaction so that, if and when the house is sold later, the kids can recoup some of their investment in it.
None of us has ever done any of this before, and nobody in our families have, either. Our current working idea (which we're researching, hence this forum post) is to form some sort of family trust, with DH as trustee (he is an excellent choice). MIL would transfer title of the house to the trust, which would be held by the kids but NOT MIL, the kids would kick money into the trust, and the trust would pay off as much debt as possible. Additional influxes of cash over time would be reflected in the percentage each kid had in the trust. The trust would give MIL the sole and exclusive use of the house until her death (which is, hopefully far, far away) and MIL would be expected to maintain the house in at least its current condition, as well as make remaining mortgage and tax payments.
Then, when MIL passes, the kids can decide what they want to do -- if one kid wants to buy the others out, if the trust wants to rent the property, etc.
Anyone heard of anything like this, and are there other legal structures we should consider? One concern is that if a single kid ran into money trouble and declared personal bankruptcy or is sued in a liability lawsuit, we wouldn't want the trust exposed to that liability. How can we shield against this? Also, what happens if MIL stops making mortgage or tax payments? How would this affect the trust?
Thanks for any ideas or other places to look. We'll be talking to an attorney about this in the next couple of weeks, as well as to a mortgage broker, but I thought I'd cast our net wide for ideas first, before we start shelling out $350/hr to get "educated" by our attorney.