Collateral from Inheritance

brady23

I inherited property from a relative. The assets are divided equally between myself and my siblings.
The assets were to be left in care of the executors until we reached a certain age, at which point we would receive a small amount of money also.
The youngest beneficiary will not reach the age for 4 more years and although I feel selling the assets would be in the overall best interest of the family given its upkeep is quite high, the other beneficiaries don't want to. I understand the sentimental attachment they have so I have no desire to push the issue.
I would personally like access to my share as I feel it would be most beneficial to me at this point.
Therefore my question is would a financial institution be willing to give me a loan/mortgage using my inheritance as collateral?
Any advice would be appreciated.

Peregrinus

They might be, yes, but they'd look very carefully at your expectation, and they would value it very conservatively. They'd also look at the nature of the property, the nature of your interest in it, and the question of whether you could grant a valid and effective charge over it to secure any loan made to you. So there's a lot of unknowns.

Lockedout2

In the care of executors?

Do you mean in a trust, if so what does the trust deed say?

The assets are to be distributed on the youngest object reaching the age of 21?

brady23

Yeah in a trust sorry.

Well I received the remaining funds from my share when I reached the assigned age.
The trustees have power of appropriation, the power to sell/buy assets within certain criteria and power to distribute funds to beneficiaries before they turn the assigned age.

Peregrinus

OK. A lender can't assume that any assets will be advanced before they have to be, can't assume that the assets currently held by the trust will be the assets eventually distributed, and obviously can't assume that the assets of the trust - whatever they may be from time to time before distribution - won't lose significant value before being distributed. And, with trusts, there's always the possibility that they affairs of the trust may be held up by litigation from another beneficiary (i.e. not the beneficiary to whom the loan is extended).

All of this will lead the lender to value your expectation under the trust very conservatively. A further factor, of course, is that even if you grant a valid charge over your expectations under the trust, that's not a charge over an asset that they can take and sell immediately on default. If you default on the loan, they will still have to wait for years or more before they actually receive your distributions under the trust, which means that the amount they will advance to you will be capped at a sum which, with four years accumulated interest, will still be more than covered by the lower end of of the range of distributions that might reasonably be foreseen as coming to you from the trust.

So, all in all, you won't be able to borrow a huge amount against your expectations under the trust, relative to the amount you think you might get in four years time. If you can persuade the trustees to make an early distribution to you, that is almost certainly going to get you signficantly more than any bank will lend to you.

brady23

Thanks appreciate that. I understand it from a lenders point of view.
Given my inheritance is entirely tied up in property but I have reached the alloted age.
Has my inheritance technically been distributed to me from a legal standpoint or can this not occur until the final beneficiary has reached the age (25). I know weird age but probably not a bad idea in theory

Peregrinus

Well, we haven't seen the terms of the trust.

But odds are, no, your share has not yet been distributed to you, not even "technically". It's still held in the trust.

brady23

Peregrinus wrote: »

Well, we haven't seen the terms of the trust.

But odds are, no, your share has not yet been distributed to you, not even "technically". It's still held in the trust.

That's great thanks for that, appreciate the insight