Good morning! This is an "interesting" situation... I'd like to ask everybody's opinion about it.
First an update. The divorce is over, I kept the rentals. As part of the settlement I have to refi two of the rental houses (her name was on the mortgage with me.) She has to refi the primary residence so she can keep it, but she's too deep in debt and can't refi. The debt she stuck me with was simply too much and I had to file a C-13. So for now, neither one of us can refi.
The joint debt was never paid late, mortgages always on time, etc. So I've included the joint debt as 100% payback to protect her as a co-debtor. No impact to her credit. The C-13 plan is a 100% payback, I keep my tax refunds, etc. And as part of the C-13 plan, the trustee has already given me permission to sell off any or all of the rental houses as a normal part of doing business, provided that the debt is paid in full... no short sales. And in fact I did sell one of the houses to the tenant, to everybody's satisfaction.
So, everything is coasting along fine. Now here's my new situation and questions: my mother is in her advanced years. Some time back, she moved her major assets into an irrevocable trust with spendthrift provision. She still lives in her home, no financial pressure. But her health is failing and she may need to move into a nursing home in the moderate future. At that point she'll sell her house and invest the proceeds.
She is the trustee of her irrevocable trust, and I am the backup trustee. Her elder law attorney assures us that should she pass away, the trust is shielded from the bankruptcy trustee. And the fact that I'm in a 100% payback helps .
My mother is talking about using the proceeds from selling her home to either:
This is based upon my mother taking action while she's still alive. I'm fairly sure my trustee will not object... but does anybody see any bankruptcy law that we might be stepping on?
Thanks everybody!
First an update. The divorce is over, I kept the rentals. As part of the settlement I have to refi two of the rental houses (her name was on the mortgage with me.) She has to refi the primary residence so she can keep it, but she's too deep in debt and can't refi. The debt she stuck me with was simply too much and I had to file a C-13. So for now, neither one of us can refi.
The joint debt was never paid late, mortgages always on time, etc. So I've included the joint debt as 100% payback to protect her as a co-debtor. No impact to her credit. The C-13 plan is a 100% payback, I keep my tax refunds, etc. And as part of the C-13 plan, the trustee has already given me permission to sell off any or all of the rental houses as a normal part of doing business, provided that the debt is paid in full... no short sales. And in fact I did sell one of the houses to the tenant, to everybody's satisfaction.
So, everything is coasting along fine. Now here's my new situation and questions: my mother is in her advanced years. Some time back, she moved her major assets into an irrevocable trust with spendthrift provision. She still lives in her home, no financial pressure. But her health is failing and she may need to move into a nursing home in the moderate future. At that point she'll sell her house and invest the proceeds.
She is the trustee of her irrevocable trust, and I am the backup trustee. Her elder law attorney assures us that should she pass away, the trust is shielded from the bankruptcy trustee. And the fact that I'm in a 100% payback helps .
My mother is talking about using the proceeds from selling her home to either:
- Let the trust refinance the two rental homes that still have the ex on the mortgage. This gives the trust interest income and satisfies the family court ruling.
- Use the trust to purchase these two homes outright. I would continue to manage them, but the income would go into her trust. And selling the homes would shake loose the Schedule E losses that have built up, giving me a small tax refund windfall.
This is based upon my mother taking action while she's still alive. I'm fairly sure my trustee will not object... but does anybody see any bankruptcy law that we might be stepping on?
Thanks everybody!
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