My in-laws are loaning my husband and I money to pay off a second mortgage. They are putting a lien on our home as collateral and we are doing a promissory note. I have asked to add a clause that states "the estate cannot force early payment of the loan", but my in-laws say that I shouldn't worry because they have a living trust in place.
Their daughter is the executor as well as a beneficiary of the estate and is composing the contract. Can the trust force an early repayment upon the death of both trust holders? Would our home become part of the trust fund? Could we potentially lose our home?
You have asked questions that are beyond the ability of this forum to answer, because the answers will be found in the loan documents and the trust. It is never wise to allow a lien or mortgage to be placed on a residence without understanding the terms of the mortgage/lien and the underlying promissory note. In your case, you have yet another legal document — the trust — that you need to know more about.
If, after reading ALL of the documents that could affect your home, you are unsure of what will or could happen, spend the money to consult with an attorney to protect your interests. Don't get lulled into a false sense of security just because this is "friendly" debt.
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You have asked questions that are beyond the ability of this forum to answer, because the answers will be found in the 