Question Payback Children's Trust.. or not?

[Frogge]

We borrowed about $8500 from our children's trust fund (at a brokerage, my sister handles it - from my late dad's estate) to pay down on the purchase of our current home last summer. Of course the intention was to pay it back over time once the old house in TN sold and we got on our feet - which as we all know didn't happen. I have not yet paid anything back to the trusts.

I'm now thinking about this-- should I list the trust fund broker/company as a creditor when we file? Can I? How will this work? I don't know how this would be categorized in the eyes of the trustee?

Thanks

[jktrading]

Pay it back. Do a reaffirmation if you need to. That's your children's money.

[chloe0724]

I agree with JK. I have to say I'm very surprised that the Trustee let you borrow money from the children's trust. Trust's are set up for specific reasons and the wording is pretty specific.

[BK2008]

I agree with JK. I have to say I'm very surprised that the Trustee let you borrow money from the children's trust. Trust's are set up for specific reasons and the wording is pretty specific.

It doesn't look like they filed yet. And paying it back now could be looked upon as a preferential payment. And they should be able to easily prove that the money went into the down payment of their new home. Reaffirming the loan should be able to get done. Check with your attorney on this.

[Frogge]

No, we haven't filed -- it could be another 6 months before we do, that's why I was wondering .. it wasn't set up as a loan, and yes it was paid to the title company for the house at closing and documented.

[Flamingo]

Hopefully I will word this all correctly as I have to run out the door to work...How was that trust set up? Who paid the funds to the title company - was the money paid to you or did someone else (trustee, brokerage firm) pay the funds at settlement? If the trust is set up by the Estate under your name(s) for the "benefit of" of your children, that is a custodial trust where that money that is available to you and can be taken out by you. That means the trust money available is also an asset to you.

If the trust is not a custodial trust and is being handled by your sister and she or someone else took out funds to benefit you, I suggest getting some competent legal and tax advice on this situation because there could be other implications including taxes involved if you utilized the money and did not pay it back.

[turnedleaf]

Pay it back. I could not look my children in the face knowing I had done that and not remedied it, personally.

[Frogge]

OK, Let's get this out of the way so you understand better. My kids will get that money back. Period. That's not the issue in the slightest and I would never EVER consider taking money out of their funds and just telling them when they turned of age that they were SOL. I have another $3-4000 to pay back with 5 years, another $4000 with 10. It will come back to them and then some when this foreclosure/bk mess is over with.

The trust funds were set up when my dad passed away in 2000. My mother is in hospice care now and so my brother is POA for the estate. I approached my siblings about the need for money when I realized I needed to move quickly last year. Everything is tied up in the estate until my mother passes away. I did not suggest borrowing from the trusts. It was suggested by our family attorney to my sister because of how everything is set up. I'm not an expert on this estate stuff, I don't handle it, I just went to my family for help and this is what happened.

Sorry if that sounds harsh but I've never cried about any response I had on this forum until today. My emotions are a bit high, so I apologize.
My question was regarding the TIMING of payback in regards the BK filing.
Thanks for the responses.

[Flamingo]

OK, Let's get this out of the way so you understand better. My kids will get that money back. Period. That's not the issue in the slightest and I would never EVER consider taking money out of their funds and just telling them when they turned of age that they were SOL. I have another $3-4000 to pay back with 5 years, another $4000 with 10. It will come back to them and then some when this foreclosure/bk mess is over with.

The trust funds were set up when my dad passed away in 2000. My mother is in hospice care now and so my brother is POA for the estate. I approached my siblings about the need for money when I realized I needed to move quickly last year. Everything is tied up in the estate until my mother passes away. I did not suggest borrowing from the trusts. It was suggested by our family attorney to my sister because of how everything is set up. I'm not an expert on this estate stuff, I don't handle it, I just went to my family for help and this is what happened.

Sorry if that sounds harsh but I've never cried about any response I had on this forum until today. My emotions are a bit high, so I apologize.
My question was regarding the TIMING of payback in regards the BK filing.
Thanks for the responses.

Frogge - I am not one of the ones on here who was harsh with you. I did suggest you getting competent legal/tax advice here because you are dealing with funds that could be an asset to you in some respect since you have access to them. Just your ability to obtain a loan from those funds is indicative enough. Depending upon how that trust is worded and also since your mother is still alive and I am assuming certain things will take place at that time, and since you are now considering BK now, I suggest either having a talk with the "family" attorney who stated you could borrow from those funds or else confer with a BK/tax attorney about the entire situation. I am not delving into emotions (been there with mother dying in nursing home, etc.) so I am fully aware of your circumstances and financial issues on top of it. I am just trying to give you some sound advice to protect yourself. Best of luck and I hope things work out for you...