Help with understanding a mortgage in trust

trusteeme

Hi,

Hoping someone knows the answer to this question- will see IFA if possible but trying to get an insight before I do.

I am one of two executors and trustees for an estate of a friend, which has 7 more years to run until the recipient is of the age needed to dissolve the trust and have control over their affairs.

Probate has been granted, will executed and all financial affairs settled bar the main one: mortgages! 3 properties- 2 rented out and more than covering the outgoings, 1 a residence for the individual the trust has been established for.

The mortgage companies are now wanting the mortgages to be taken on by the trust (to get them out of the deceased's name). When speaking with a specialist broker about doing this, they mentioned personal liabilities- meaning they would want to know the personal financial details of the individual trustees (incomes, outgoings, debts, financial history, monthly outgoings and commitments etc). Which begged the question: does being a trustee for these mortgages impact upon the trustee's personal finances?

What would happen if one of the trustees were to apply for credit/a mortgage in the future- would these mortgages count against them as a liability and impact upon affordability criteria etc?

No one (albeit haven't asked a specialist IFA yet) can confirm the implications taking this step could have on credit files, future borrowing and personal liability- can anyone here help?

If it is a simple case of checking the trust assets and that the trustees aren't discharged bankrupts or have ccjs etc then fair enough- but we are confused as to why this level of personal detail is needed?

Can anyone shed any light?

Thanks in advance

Thrugelmir

To discharge the liabilities. There's 2 choices. Sell the properties, or settle the outstanding mortgages. With either cash (sell just 1 property to release sufficient equity for example) or refinancing the mortgage debt.

To refinance the mortgage debt someone has to accept full responsibility for the debt. Therefore the applicants will be subject to all the normal checks.

trusteeme

Thanks for the reply.

Yes the selling of the properties has been discussed- it's on the table as one of the solutions.

I think if there was no link to personal finances and liabilities then it would seem less of an issue. But if there's a link that will be taken into consideration when either trustee needs to secure finance in future then I would struggle to proceed with this.

I wonder if this is a common situation?

Thanks

Thrugelmir

trusteeme wrote: »

I wonder if this is a common situation?

Thanks

What you are proposing is extremely uncommon. As merely adds a layer of unnecessary complexity. Ultimately increased cost and time.

trusteeme

You mean a trust in general? I think I haven't truly understood the implications on my individual/personal finances and in that sense I'm unhappy to proceed further as I don't want financial links to anyone/trust except my significant other.

I was wondering how common it was for estates to be left in trust that have mortgages properties that the trust is expected to keep and not sell if at all possible- and therefore personal liability/linking is assumed/inevitable. And it seems the case that should I not be comfortable proceeding with refinancing the debt into our names as trustee then I have to resign so another can be appointed

I have found nothing at all advice wise online- hence these ponderings.

Thanks for your help