This really is an asking for a friend. We had dinner last night with close friends where the wife had her father pass away two weeks ago. There is a rental house in one trust that she's a beneficiary shared with two other half sibling (with mildly estranged relationships). The house is near her but the others are far away and of course there's no interest in shared ownership. The house currently has no mortgage.

So, she'd like to get the house and could take it in lieu of some of the cash and/or other liquid assets. However, she's like to have a mortgage and not tie up all cash for the house as it's a rental. But, the other beneficiaries won't wait for her to get the paperwork for a mortgage (but what type of mortgage as she's not buying it from the trust but it's a dispersement). The house being in a hot marked means if it were to go for open sale there'd be cash buyers immediately. So cash is the only way to get it as the others want their $ asap.

How does one inherit a house and then mortgage it? Would a home equity loan be the only kind? How can she get a primary mortgage?

She can purchase it from the trust if she has the cash for the down payment. Then when the estate is settled, she will have her portion. She could then pay down the mortgage, if she wants.

It really depends on the total value of the estate and her cash but being that they are rushing the sale be prepared for the value to be an issue. If it is, see if they will allow it to be marketed with her having the ability to match the best offer. She should get a mortgage rolling just in case of an all cash offer. There is a chance that she may get a deal or a great offer that increases her proceeds.

Without knowing details, one possible way is to create LLC with each bene as an owner. Distribute house to all benes outright. Convey to LLC. Get renter. Mortgage (cash out). Buy out other LLC members using proceeds.

This won't go as fast as it sounds they would want and involves extra expense. But that is a rough path that could work. If lender won't allow just the intended owner/bene as the guarantor, this may hit a dead end on moving somewhat quick.

She should just sue the trust/trustee for malfeasance to tie up settlement until she can procure a mortgage than drop charges.

If there's not enough cash in the estate for her to buy her siblings out and they want paid immediately, and she's amenable to their terms, then she should start getting a HELOC on her own home and use that to pay them off, assuming her home has that much equity. But I'm assuming she doesn't have that much equity, and may have a husband not willing to do that, so IMO it comes down to who is the executor. If it's her and the others are just beneficiaries then she has the power to make the decision. She might piss the others off, but it's her decision as long as she abides by the terms of the will.
Frankly if it were me I'd put the home on the market and not saddle myself with debt on a home I'm not living in that may or may not rent quickly. As for the beneficiaries wanting their cut right away, screw that and proceed with the probate process in a fiscally responsible manner. Once the home is fully in her name then she can try for a HELOC, but, and this is a but, can she qualify for a HELOC in her name only? Because the house will be in her name.

birdman said:

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Most of the scenarios mentioned in this thread are overly complicated. They also involve cooperation of people described as "mildly estranged".

You don't need to do anything fancy or get creative with the probate. She just needs to inherit the property outright and not share with anyone. If that means she gives up a piece of something else in the estate, then do it. Just don't overpay for it. Sometimes, when estranged people inflate the value of something out of spite. A common sense Executor will sort this out.

And that point your wife, Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple.

You mentioned trust. It also depends on nature of trust. If the trust disperses upon death of guy (I can't remember the people), then the three beneficiaries own it. But typically, a trust is created specifically to get around estates. That means the deceased doesn't own the rental property.

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Bingo! This is the one that understands the situation. It's in a trust and not an estate and the trust disperses upon death of the trustee. There is no executor but her (not my wife but a friend's wife) half-sister is the successor trustee. And those saying things take time with probate, there is no probate. Checks for cash have already been cut as the other two are chomping at the bit for their money. She doesn't have a cash problem as others speculated (she could take the house as part of her third but would still get more on top of it - also, she and her husband are well to do).

And good points on the CYA regarding valuation. She and the successor trustee are on better terms with the other half-sibling. So, they know undervalued will get a lawsuit but she's not going to overpay so likely a couple of different appraisals.

So, as you say "And that point your wife (sic), Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple." sounds like the way one would go.

jwoodmd said:

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birdman said:

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Most of the scenarios mentioned in this thread are overly complicated. They also involve cooperation of people described as "mildly estranged".

You don't need to do anything fancy or get creative with the probate. She just needs to inherit the property outright and not share with anyone. If that means she gives up a piece of something else in the estate, then do it. Just don't overpay for it. Sometimes, when estranged people inflate the value of something out of spite. A common sense Executor will sort this out.

And that point your wife, Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple.

You mentioned trust. It also depends on nature of trust. If the trust disperses upon death of guy (I can't remember the people), then the three beneficiaries own it. But typically, a trust is created specifically to get around estates. That means the deceased doesn't own the rental property.

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Bingo! This is the one that understands the situation. It's in a trust and not an estate and the trust disperses upon death of the trustee. There is no executor but her (not my wife but a friend's wife) half-sister is the successor trustee. And those saying things take time with probate, there is no probate. Checks for cash have already been cut as the other two are chomping at the bit for their money. She doesn't have a cash problem as others speculated (she could take the house as part of her third but would still get more on top of it - also, she and her husband are well to do).

And good points on the CYA regarding valuation. She and the successor trustee are on better terms with the other half-sibling. So, they know undervalued will get a lawsuit but she's not going to overpay so likely a couple of different appraisals.

So, as you say "And that point your wife (sic), Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple." sounds like the way one would go.

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If house is in BCS, I can email you comps. And no, I am not at all interested in selling it for her.

jwoodmd said:

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birdman said:

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Most of the scenarios mentioned in this thread are overly complicated. They also involve cooperation of people described as "mildly estranged".

You don't need to do anything fancy or get creative with the probate. She just needs to inherit the property outright and not share with anyone. If that means she gives up a piece of something else in the estate, then do it. Just don't overpay for it. Sometimes, when estranged people inflate the value of something out of spite. A common sense Executor will sort this out.

And that point your wife, Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple.

You mentioned trust. It also depends on nature of trust. If the trust disperses upon death of guy (I can't remember the people), then the three beneficiaries own it. But typically, a trust is created specifically to get around estates. That means the deceased doesn't own the rental property.

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Bingo! This is the one that understands the situation. It's in a trust and not an estate and the trust disperses upon death of the trustee. There is no executor but her (not my wife but a friend's wife) half-sister is the successor trustee. And those saying things take time with probate, there is no probate. Checks for cash have already been cut as the other two are chomping at the bit for their money. She doesn't have a cash problem as others speculated (she could take the house as part of her third but would still get more on top of it - also, she and her husband are well to do).

And good points on the CYA regarding valuation. She and the successor trustee are on better terms with the other half-sibling. So, they know undervalued will get a lawsuit but she's not going to overpay so likely a couple of different appraisals.

So, as you say "And that point your wife (sic), Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple." sounds like the way one would go.

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To be fair, your OP premise is confusing as hell.

We just went through this scenario. You will need to get an appraisal of the home to establish the value of the home. At that point, your friend takes the house and the other beneficiaries of the trust get cash to offset the value of the home that your friend is getting. I will also say that even with a trust and no probate this could take longer than you think. Again, just lived through this.

With that done, you are then saying she wants to establish a mortgage for a house that is already paid for? That's where I'm confused....

YouBet said:

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jwoodmd said:

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birdman said:

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Most of the scenarios mentioned in this thread are overly complicated. They also involve cooperation of people described as "mildly estranged".

You don't need to do anything fancy or get creative with the probate. She just needs to inherit the property outright and not share with anyone. If that means she gives up a piece of something else in the estate, then do it. Just don't overpay for it. Sometimes, when estranged people inflate the value of something out of spite. A common sense Executor will sort this out.

And that point your wife, Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple.

You mentioned trust. It also depends on nature of trust. If the trust disperses upon death of guy (I can't remember the people), then the three beneficiaries own it. But typically, a trust is created specifically to get around estates. That means the deceased doesn't own the rental property.

---

Bingo! This is the one that understands the situation. It's in a trust and not an estate and the trust disperses upon death of the trustee. There is no executor but her (not my wife but a friend's wife) half-sister is the successor trustee. And those saying things take time with probate, there is no probate. Checks for cash have already been cut as the other two are chomping at the bit for their money. She doesn't have a cash problem as others speculated (she could take the house as part of her third but would still get more on top of it - also, she and her husband are well to do).

And good points on the CYA regarding valuation. She and the successor trustee are on better terms with the other half-sibling. So, they know undervalued will get a lawsuit but she's not going to overpay so likely a couple of different appraisals.

So, as you say "And that point your wife (sic), Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple." sounds like the way one would go.

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To be fair, your OP premise is confusing as hell.

We just went through this scenario. You will need to get an appraisal of the home to establish the value of the home. At that point, your friend takes the house and the other beneficiaries of the trust get cash to offset the value of the home that your friend is getting. I will also say that even with a trust and no probate this could take longer than you think. Again, just lived through this.

With that done, you are then saying she wants to establish a mortgage for a house that is already paid for? That's where I'm confused....

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The concept of a home equity loan confuses you?

Win At Life said:

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YouBet said:

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jwoodmd said:

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birdman said:

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Most of the scenarios mentioned in this thread are overly complicated. They also involve cooperation of people described as "mildly estranged".

You don't need to do anything fancy or get creative with the probate. She just needs to inherit the property outright and not share with anyone. If that means she gives up a piece of something else in the estate, then do it. Just don't overpay for it. Sometimes, when estranged people inflate the value of something out of spite. A common sense Executor will sort this out.

And that point your wife, Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple.

You mentioned trust. It also depends on nature of trust. If the trust disperses upon death of guy (I can't remember the people), then the three beneficiaries own it. But typically, a trust is created specifically to get around estates. That means the deceased doesn't own the rental property.

---

Bingo! This is the one that understands the situation. It's in a trust and not an estate and the trust disperses upon death of the trustee. There is no executor but her (not my wife but a friend's wife) half-sister is the successor trustee. And those saying things take time with probate, there is no probate. Checks for cash have already been cut as the other two are chomping at the bit for their money. She doesn't have a cash problem as others speculated (she could take the house as part of her third but would still get more on top of it - also, she and her husband are well to do).

And good points on the CYA regarding valuation. She and the successor trustee are on better terms with the other half-sibling. So, they know undervalued will get a lawsuit but she's not going to overpay so likely a couple of different appraisals.

So, as you say "And that point your wife (sic), Jane Doe, will own the house free and clear. You wouldn't want a rental property in your name anyway. You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple." sounds like the way one would go.

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To be fair, your OP premise is confusing as hell.

We just went through this scenario. You will need to get an appraisal of the home to establish the value of the home. At that point, your friend takes the house and the other beneficiaries of the trust get cash to offset the value of the home that your friend is getting. I will also say that even with a trust and no probate this could take longer than you think. Again, just lived through this.

With that done, you are then saying she wants to establish a mortgage for a house that is already paid for? That's where I'm confused....

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The concept of a home equity loan confuses you?

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No, the fact that you would want a "mortgage" for a house that is paid for which was how it was presented.

If we are talking about a home equity loan, then that is obviously different.

HELOC's are harder to qualify for than regular mortgages, does the wife qualify for one on her own?

Quote:

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You set up a corporation called "Jane Doe Rentals". Jane Doe individually, sells to Jane Doe Rentals, which has to take out a mortgage. Simple.

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I know this is a little further down the horizon from what the OP is asking, but, honest question, is this really that simple? I mean would Jane Doe Rentals, a newly formed corporation with zero history, really be approved for a mortgage that easily?

No, to the suggestion of setting up a corporation for the property. LLC is much easier to set up, manage, etc.