021: Making Loans to an Irrevocable Trust Is Possible. Here’s How.
Release Date: 12/04/2018
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Welcome back to Absolute Trust Talk with Kirsten Howe and associate attorney Jessica Colbert! In this second episode of our AB Trust series, we dive into a vital question: Will your wishes truly be honored? While AB Trusts are a common estate planning tool for couples, they have potential challenges. One significant issue is when the deceased spouse's wishes are unintentionally—or even deliberately—overlooked or altered. Tune in as we explore how and why this happens and, more importantly, what steps you can take to ensure that your estate plan works exactly as intended. ...
info_outlineDid you know it’s possible to make a loan to an irrevocable trust? Many people don’t know it is, and even though conventional lending firms might say they do it, they don’t truly understand and often force the borrower to take the loan out of the trust – negating the benefit. Jim O’Dea, a broker associate with Redwood Mortgage, a private money lender, has been with Redwood for over 14 years and has over 40 years of commercial real estate experience. Jim has made the irrevocable trust loan transaction a niche of sorts and, at Redwood alone, has originated and closed over $150 million in loans.
In today’s episode, Kirsten and Jim discuss why making loans to irrevocable trusts is such a difficult transaction, why it happens in the first place, how it is completed and why it is such a tremendous opportunity for families to take advantage of. This is an educational episode of Absolute Trust Talk not to be missed.
Top Takeaway From Episode #021:
- This type of loan transaction is a benefit, an opportunity, and an educational experience for many families, and many people don’t know that it’s out there as an option.
Time-stamped Show Notes:
3:11 – Jim discusses why making loans to irrevocable trusts is such a difficult transaction
7:06 – Jim talks about a typical scenario in which clients are referred to him and his business
13:28 – Kirsten asks Jim to give an example of how the loan amount is calculated
24:21 – Kirsten asks Jim to share an example of tax benefits to the family doing the loan to an irrevocable trust
25:38 – Jim shares how he got into this specific loan business
28:40 – Why families often miss this loan opportunity
31:28 – Are there other opportunities to make loans to irrevocable trusts?
33:35 – Could this type of loan transaction take place if there is another type of property, other than the family home?
Episode #021 Freebie: Excel Spreadsheet – Deriving Loan Amounts on Irrevocable Trusts
Didn’t know that making loans to an irrevocable trust was possible, but it is. Absolute Trust Talk guest Jim O’Dea has helped many clients make this difficult loan transaction possible, and he’s ready to help get you started too. Jim has developed a special Excel spreadsheet that lends a hand in determining the potential loan on an irrevocable trust loan. In addition, it serves as a handy checklist, taking into account the many variables that could impact the loan amount. Click here to download your copy of this specially developed spreadsheet.