Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

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Marseille07
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by Marseille07 »

michaeljc70 wrote: Sat Sep 17, 2022 9:04 am How sustainable is taking out $60k a year out of $823k for a young woman? That is 7.2%. Obviously not the OP's problem unless she becomes a long term tenant, but still.
I'm not super familiar with an IT but if this is just a cash holding then the math is straightforward.

I wouldn't rent because her CS is low, but not because she can't pay rent - with 5K/mo, she probably can even if her CL is 98% utilized.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by bsteiner »

AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by FellsGuy »

Hmm what movie to watch tonight? Maybe something with Meg Ryan...

https://www.imdb.com/title/tt0100318/
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by AnnetteLouisan »

bsteiner wrote: Sat Sep 17, 2022 9:45 am
AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
A monthly amount is just awesome, so they can’t waste it too quickly. Maybe that is what someone meant when he said he didn’t like the message sent by the trust of which he was a beneficiary, namely that the donor didn’t trust him (no pun intended), not to squander it. But I think it’s just nice and prudent, trying to provide a nice amount for a lifetime.
Last edited by AnnetteLouisan on Sat Sep 17, 2022 1:48 pm, edited 2 times in total.
Marseille07
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by Marseille07 »

AnnetteLouisan wrote: Sat Sep 17, 2022 1:10 pm A monthly amount is just awesome, so they can’t waste it too quickly. Maybe that is what someone meant when he said he didn’t like the message sent by the trust of which he was a beneficiary, namely that the donor didn’t trust him (no pun intended), not to squander it. But I think it’s just nice and prudent, trying to provide a nice amount for a lifetime.

We are (in the future) getting stuff outright rather than monthly amounts, but it’s because our parents don’t know any better.

If I received $5k a month with no strings as a young person I probably wouldn’t have worked and just spent a lot too. How on earth could you be motivated to work under those circumstances unless you were just naturally so inclined? To me personally, I would have appreciated it, of course, but it would have been a huge disincentive to do anything but spend. You’d have to be almost a work fanatic for that not to affect your choices. And then of course you’d want more. Do they only give these trusts after death? Because of course nothing is worth having a parent die, that’s really sad if all trust funders had parents who passed, but maybe some of it is from grandparents.

No wonder middle class me had so many educational and career opportunities. The rich kids neither want nor need them.
Was it mentioned somewhere that the applicant is young? If I were a young person receiving 5K/mo on 823K, I'd start looking for work; if the trust is just a cashpile, it's not going to last for their lifetime.
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ResearchMed
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by ResearchMed »

AnnetteLouisan wrote: Sat Sep 17, 2022 1:10 pm
bsteiner wrote: Sat Sep 17, 2022 9:45 am
AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
A monthly amount is just awesome, so they can’t waste it too quickly. Maybe that is what someone meant when he said he didn’t like the message sent by the trust of which he was a beneficiary, namely that the donor didn’t trust him (no pun intended), not to squander it. But I think it’s just nice and prudent, trying to provide a nice amount for a lifetime.

We are (in the future) getting stuff outright rather than monthly amounts, but it’s because our parents don’t know any better.

If I received $5k a month with no strings as a young person I probably wouldn’t have worked and just spent a lot too. How on earth could you be motivated to work under those circumstances unless you were just naturally so inclined? To me personally, I would have appreciated it, of course, but it would have been a huge disincentive to do anything but spend. You’d have to be almost a work fanatic for that not to affect your choices. And then of course you’d want more. Do they only give these trusts after death? Because of course nothing is worth having a parent die, that’s really sad if all trust funders had parents who passed, but maybe some of it is from grandparents.

No wonder middle class me had so many educational and career opportunities. The rich kids neither want nor need them.

:confused

"Rich kids" neither want nor need "educational and career opportunities"?
... as a general catetegory?
That's what you think/believe?
Really!?

RM
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AnnetteLouisan
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by AnnetteLouisan »

Deleted. Off topic.
Last edited by AnnetteLouisan on Sat Sep 17, 2022 1:46 pm, edited 4 times in total.
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joer1212
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

Marseille07 wrote: Sat Sep 17, 2022 12:24 am
ResearchMed wrote: Fri Sep 16, 2022 11:50 pm
joer1212 wrote: Fri Sep 16, 2022 8:55 pm Update: the co-trustee emailed me the applicant's trust fund latest statement, which shows a balance of over 823K.

Does she have unlimited access to that amount?
If so, why is she running balances on charge cards that probably charge interest?
:confused

Just seems a bit odd.

RM
The OP says: "her only income is $5,000/mo from an irrevocable trust in her name."

So she probably has some kind of arrangements where she can only draw 5K/mo rather than unlimited access to 823K.
Correct.
Last edited by joer1212 on Sat Sep 17, 2022 1:34 pm, edited 1 time in total.
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ResearchMed
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by ResearchMed »

AnnetteLouisan wrote: Sat Sep 17, 2022 1:17 pm I would just stop everything, lie down, get some Boursin and crackers, and pop open the fashion magazines.

Hm…. Guess that might be why my parents haven’t given me money in 30 years…. Hmmmm. Guess they made the right decision.

If I was given $5k a month guaranteed for life as a young person I’d just move to Paris and sketch. I think you’d have to be really well trained and intensely committed to work without needing $.

Money is not the only motivator.

I've occasionally done research that I felt needed to be done, and I did it for no pay. (No surprise, those were projects that I mostly enjoyed doing anyway, although nothing's perfect.)

And I've occasionally taught for no pay, because I enjoy it.

DH is starting to phase out his paid work.
His PAID work. Almost all of his PAID work.
He's not working any less... perhaps more, having been asked to help start a new graduate program at another branch of the U.

You also seem to be discounting any real volunteer work. Why is that different?

RM
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by AnnetteLouisan »

ResearchMed wrote: Sat Sep 17, 2022 1:15 pm
AnnetteLouisan wrote: Sat Sep 17, 2022 1:10 pm
bsteiner wrote: Sat Sep 17, 2022 9:45 am
AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
A monthly amount is just awesome, so they can’t waste it too quickly. Maybe that is what someone meant when he said he didn’t like the message sent by the trust of which he was a beneficiary, namely that the donor didn’t trust him (no pun intended), not to squander it. But I think it’s just nice and prudent, trying to provide a nice amount for a lifetime.

We are (in the future) getting stuff outright rather than monthly amounts, but it’s because our parents don’t know any better.

If I received $5k a month with no strings as a young person I probably wouldn’t have worked and just spent a lot too. How on earth could you be motivated to work under those circumstances unless you were just naturally so inclined? To me personally, I would have appreciated it, of course, but it would have been a huge disincentive to do anything but spend. You’d have to be almost a work fanatic for that not to affect your choices. And then of course you’d want more. Do they only give these trusts after death? Because of course nothing is worth having a parent die, that’s really sad if all trust funders had parents who passed, but maybe some of it is from grandparents.

No wonder middle class me had so many educational and career opportunities. The rich kids neither want nor need them.

:confused

"Rich kids" neither want nor need "educational and career opportunities"?
... as a general catetegory?
That's what you think/believe?
Really!?

RM
Yeah no, that doesn’t sound right either. You’re right.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

LittleMaggieMae wrote: Fri Sep 16, 2022 3:44 pmmy Property Manager checks with previous landlords (if applicable) when vetting potential tenants.
This can actually be counterproductive, as a previous landlord may want to get rid of a bad tenant and give you false (good) info about her. Happened to me once.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by AnnetteLouisan »

ResearchMed wrote: Sat Sep 17, 2022 1:25 pm
AnnetteLouisan wrote: Sat Sep 17, 2022 1:17 pm I would just stop everything, lie down, get some Boursin and crackers, and pop open the fashion magazines.

Hm…. Guess that might be why my parents haven’t given me money in 30 years…. Hmmmm. Guess they made the right decision.

If I was given $5k a month guaranteed for life as a young person I’d just move to Paris and sketch. I think you’d have to be really well trained and intensely committed to work without needing $.

Money is not the only motivator.

I've occasionally done research that I felt needed to be done, and I did it for no pay. (No surprise, those were projects that I mostly enjoyed doing anyway, although nothing's perfect.)

And I've occasionally taught for no pay, because I enjoy it.

DH is starting to phase out his paid work.
His PAID work. Almost all of his PAID work.
He's not working any less... perhaps more, having been asked to help start a new graduate program at another branch of the U.

You also seem to be discounting any real volunteer work. Why is that different?

RM
You’re right, I do certain things like charity and foundation work for free. I didn’t think this through. Sorry. I was just blown away by the notion of getting $5k a month tax free just ‘cause.
Last edited by AnnetteLouisan on Sat Sep 17, 2022 1:43 pm, edited 3 times in total.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

toddthebod wrote: Fri Sep 16, 2022 10:09 pm
joer1212 wrote: Fri Sep 16, 2022 8:55 pm Update: the co-trustee emailed me the applicant's trust fund latest statement, which shows a balance of over 823K.
Why not ask for the trust pay the full year's rent up front?
Illegal in Massachusetts.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

ResearchMed wrote: Fri Sep 16, 2022 11:50 pm
joer1212 wrote: Fri Sep 16, 2022 8:55 pm Update: the co-trustee emailed me the applicant's trust fund latest statement, which shows a balance of over 823K.

Does she have unlimited access to that amount?
If so, why is she running balances on charge cards that probably charge interest?
:confused

Just seems a bit odd.

RM
I noticed this too.
It could be that she recently was given the trust fund (I have to check if it lists the date), or a red flag that she makes very bad financial decisions.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by AnnetteLouisan »

joer1212 wrote: Sat Sep 17, 2022 1:33 pm
ResearchMed wrote: Fri Sep 16, 2022 11:50 pm
joer1212 wrote: Fri Sep 16, 2022 8:55 pm Update: the co-trustee emailed me the applicant's trust fund latest statement, which shows a balance of over 823K.

Does she have unlimited access to that amount?
If so, why is she running balances on charge cards that probably charge interest?
:confused

Just seems a bit odd.

RM
I noticed this too.
It could be that she recently was given the trust fund (I have to check if it lists the date), or a red flag that she makes very bad financial decisions.
Last edited by AnnetteLouisan on Sat Sep 17, 2022 1:44 pm, edited 5 times in total.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

FellsGuy wrote: Sat Sep 17, 2022 6:26 am As a MA landlord I didn’t even read the other posts grifter alert grifter alert 🚨 run don’t walk. I’ve had tenants like this and thanked god the day I finally got them out of the house. The state of MA [political comment removed by admin LadyGeek] is not the place to take on any tenant with a “story”…but you do you.
Thank you, FellsGuy. This is the comment that settles it for me. I'm not renting to her. I know the type you're referring to. Didn't suspect she may be one of them.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 ammy question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
It mentions on my Zillow account that she has a clean record.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by joer1212 »

AnnetteLouisan wrote: Sat Sep 17, 2022 1:35 pmDoes she have unlimited access to that amount?
If so, why is she running balances on charge cards that probably charge interest?
:confused

Just seems a bit odd.

RM
I noticed this too.
It could be that she recently was given the trust fund (I have to check if it lists the date), or it's a red flag that she makes very bad financial decisions.
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ResearchMed
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by ResearchMed »

"Because if you don’t have a job, you go shopping. And you’re bored, have time on your hands and no sense of accomplishment so you need the nice handbags. Makes sense to me. I’m not judging - that’s totally what I’d do too in her circumstance."

Annette, you are making an awful lot of assumptions and projections, it seems, that most other people would do as your would do.
You've already mentioned that you don't trust yourself with credit cards.
But as with this situation, that doesn't mean that others operate the same way.

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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by AnnetteLouisan »

Yes I retract all statements around trust funds. I went back and deleted where possible. Others lead responsible lives with these benefits and I neither begrudge them that nor am I ungrateful for not having one (in my case I’m grateful I didn’t, but I had many many other wonderful opportunities in life that I pursued, many of which were funded by people whose children had trust funds, and by taxpayers and other benevolent and far sighted people whom I never had the opportunity to thank because they were anonymous).

I believe I would not have handled it well if I’d had a trust early in life, but I guess they train you in how to handle it. Probably you learn how to handle it over time (like increases in salary).

And yes I intentionally create an artificial environment of scarcity partly because The Millionaire Next Door said to do so and partly because I like to build in safeguards against possible impulsive, obsessive or addictive behavior. That’s why I don’t get a NYT Games subscription, I’m already obsessed with Wordle and the others and never miss one. But there are only five free ones per day so that works.

The income to the trust is taxed but the proceeds are not taxed to the recipient because it’s inheritance, right? I think I’m right.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by spammagnet »

joer1212 wrote: Sat Sep 17, 2022 1:26 pm
LittleMaggieMae wrote: Fri Sep 16, 2022 3:44 pmmy Property Manager checks with previous landlords (if applicable) when vetting potential tenants.
This can actually be counterproductive, as a previous landlord may want to get rid of a bad tenant and give you false (good) info about her. Happened to me once.
So, ignore the current landlord's opinion and inquire only with landlords before that?
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by spammagnet »

AnnetteLouisan wrote: Sat Sep 17, 2022 1:29 pm... I was just blown away by the notion of getting $5k a month tax free just ‘cause.
That's how inheritance works, no? Somebody dies. You get their assets. The decedent may require conditions, such as distributing it over a period of time.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by spammagnet »

AnnetteLouisan wrote: Sat Sep 17, 2022 1:50 pm... That’s why I don’t get a NYT Games subscription, I’m already obsessed with Wordle and the others and never miss one. But there are only five free ones per day so that works. ...
Go ahead and splurge on the $20/year. YOLO.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by ResearchMed »

spammagnet wrote: Sat Sep 17, 2022 2:13 pm
joer1212 wrote: Sat Sep 17, 2022 1:26 pm
LittleMaggieMae wrote: Fri Sep 16, 2022 3:44 pmmy Property Manager checks with previous landlords (if applicable) when vetting potential tenants.
This can actually be counterproductive, as a previous landlord may want to get rid of a bad tenant and give you false (good) info about her. Happened to me once.
So, ignore the current landlord's opinion and inquire only with landlords before that?

The same thing can happen with employment references, unfortunately.

It's probably useful to ask more than one reference, if possible, in general.

RM
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by FellsGuy »

joer1212 wrote: Sat Sep 17, 2022 1:36 pm
FellsGuy wrote: Sat Sep 17, 2022 6:26 am As a MA landlord I didn’t even read the other posts grifter alert grifter alert 🚨 run don’t walk. I’ve had tenants like this and thanked god the day I finally got them out of the house. The state of MA [political comment removed by admin LadyGeek] is not the place to take on any tenant with a “story”…but you do you.
Thank you, FellsGuy. This is the comment that settles it for me. I'm not renting to her. I know the type you're referring to. Didn't suspect she may be one of them.
Didn't mean to pile on its just every time I try to be nice cut someone some slack etc etc in this state with tenants you get burned [political comment removed by admin LadyGeek]
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by JackoC »

bsteiner wrote: Sat Sep 17, 2022 9:45 am
AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
OP decided not to rent to the person, but your second statement would be the only way we'd take a tenant's trust beneficiary status per se into account: if the trustees would/could sign as guarantors. Just knowing the tenant gets sufficient distributions from a trust to pay the rent, if they act responsibly, seems pretty much the same as knowing they have a job sufficient to pay the rent, but we wouldn't rent to a person with a job but dodgy credit if we could avoid it. And making a significant legal production of a $1.1k/mo lease (eg. claiming against the trust after the fact when tenant doesn't pay, if that's even possible) is never going to be worth it.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by michaeljc70 »

JackoC wrote: Sun Sep 18, 2022 11:53 am
bsteiner wrote: Sat Sep 17, 2022 9:45 am
AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
OP decided not to rent to the person, but your second statement would be the only way we'd take a tenant's trust beneficiary status per se into account: if the trustees would/could sign as guarantors. Just knowing the tenant gets sufficient distributions from a trust to pay the rent, if they act responsibly, seems pretty much the same as knowing they have a job sufficient to pay the rent, but we wouldn't rent to a person with a job but dodgy credit if we could avoid it. And making a significant legal production of a $1.1k/mo lease (eg. claiming against the trust after the fact when tenant doesn't pay, if that's even possible) is never going to be worth it.
Agreed. If you carefully read the OP the $5k/mo is not guaranteed. It states there are sufficient assets to support a $5k monthly withdrawal. What if the market drops 40%? Can she still get $5k? Of course, we have no idea what the trust is even invested in.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by bsteiner »

JackoC wrote: Sun Sep 18, 2022 11:53 am
bsteiner wrote: Sat Sep 17, 2022 9:45 am
AnnetteLouisan wrote: Sat Sep 17, 2022 7:24 am ...
Irrevocable trusts are pretty uncommon aren’t they? Thought they were often offshore asset protection vehicles, in contrast to say revocable trusts or testamentary or donor trusts. But I am sadly unfamiliar with this area, despite allegedly being a remainderman of a trust.

So my question is, who uses irrevocable trusts and why? Someone seeking to evade a money judgment? Did OP do a criminal record or reference check on this individual?
Almost all of our clients provide (in their Wills) for their children in trust rather than outright.

The original poster might ask the trustees to guaranty the lease.
OP decided not to rent to the person, but your second statement would be the only way we'd take a tenant's trust beneficiary status per se into account: if the trustees would/could sign as guarantors. Just knowing the tenant gets sufficient distributions from a trust to pay the rent, if they act responsibly, seems pretty much the same as knowing they have a job sufficient to pay the rent, but we wouldn't rent to a person with a job but dodgy credit if we could avoid it. And making a significant legal production of a $1.1k/mo lease (eg. claiming against the trust after the fact when tenant doesn't pay, if that's even possible) is never going to be worth it.
We had one such case. Due to disability the tenant had no income or assets (other than Social Security disability), but was the beneficiary of a couple of trusts, one created by his mother and one by his deceased father, which collectively had about $2 million. His mother and a lawyer were the trustees of the one his father created, and the lawyer was the trustee of the one his mother created. He expected to inherit a larger amount (in trust) upon his mother's death, so the trustees could be more liberal as to distributions than they could if not for that. Unfortunately he predeceased his mother, so when his mother dies, her estate will all go to his sister (in trust).

The trustees agreed to be responsible for his rent, which was around $2,000 a month. They didn't have any problem with landlords.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by LadyGeek »

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neverpanic
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by neverpanic »

joer1212 wrote: Sat Sep 17, 2022 1:31 pm
toddthebod wrote: Fri Sep 16, 2022 10:09 pm
joer1212 wrote: Fri Sep 16, 2022 8:55 pm Update: the co-trustee emailed me the applicant's trust fund latest statement, which shows a balance of over 823K.
Why not ask for the trust pay the full year's rent up front?
Illegal in Massachusetts.
And even if it were legal and they had the latitude to do so, no trustee should agree to do that.
AnnetteLouisan wrote: Sat Sep 17, 2022 1:50 pm Yes I retract all statements around trust funds. I went back and deleted where possible. Others lead responsible lives with these benefits and I neither begrudge them that nor am I ungrateful for not having one (in my case I’m grateful I didn’t, but I had many many other wonderful opportunities in life that I pursued, many of which were funded by people whose children had trust funds, and by taxpayers and other benevolent and far sighted people whom I never had the opportunity to thank because they were anonymous).

I believe I would not have handled it well if I’d had a trust early in life, but I guess they train you in how to handle it. Probably you learn how to handle it over time (like increases in salary).

And yes I intentionally create an artificial environment of scarcity partly because The Millionaire Next Door said to do so and partly because I like to build in safeguards against possible impulsive, obsessive or addictive behavior. That’s why I don’t get a NYT Games subscription, I’m already obsessed with Wordle and the others and never miss one. But there are only five free ones per day so that works.

The income to the trust is taxed but the proceeds are not taxed to the recipient because it’s inheritance, right? I think I’m right.
The world is varying shades of grey. There are actions/behaviors which are likely to weaken a person's ability to thrive on their own, but none is universal and nothing we do as parents will guarantee much of anything. There are parents who believe their children must inherit 100% of their own struggles and parents who think that should be 0%.

I don't know anything about the subject applicant apart from what we've been told by OP and have to take it at face value. If she's never missed a rent payment with a 5-year rental history, that's someone I'm interested in. Assuming she doesn't destroy the places she lives, having reliable income that's greater than 4x the rent is a very attractive part of the profile. When the property manager presents the application, I'm making a judgment based on the financial profile and whether I think she's a good risk to make on-time payments and take reasonably good care of my property. Others can judge what they want, but trying to evaluate the risk of bringing someone on as a tenant by questioning why they receive trust income instead of "having a job like everyone else" could not work for me. No one else's life is like mine. That's all I can say.

OP - I hope your next applicants will be less complicated.
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Joey Jo Jo Jr
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by Joey Jo Jo Jr »

Grt2bOutdoors wrote: Fri Sep 16, 2022 1:40 am
Joey Jo Jo Jr wrote: Fri Sep 16, 2022 1:15 am Maybe ask the trustees to sign a guarantee. If you can garnish wages in your state, then it only seems fair to be able to go after this applicant’s income source as well.
Correct me if I’m wrong, but to garnish you need a court order. A court though can’t break through an irrevocable trust so the corpus is off limits and if you don’t know what the terms of the trust say you can’t force income out of it for unpaid debts. The other interesting thing - if the source of income in the trust dries up, you can’t force blood from a stone.
You can reach trust assets under some circumstances, such as if the trustee contractually agreed to cover a debt. More conventional ways are if the trust requires net income or a certain amount to be distributed periodically or if the beneficiary has the right to compel a distribution or a general power of appointment. You can get a copy of a trust if you sue the beneficiary for an unpaid debt.
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by bsteiner »

neverpanic wrote: Mon Sep 19, 2022 1:50 am ...
I don't know anything about the subject applicant apart from what we've been told by OP and have to take it at face value. If she's never missed a rent payment with a 5-year rental history, that's someone I'm interested in. Assuming she doesn't destroy the places she lives, having reliable income that's greater than 4x the rent is a very attractive part of the profile. When the property manager presents the application, I'm making a judgment based on the financial profile and whether I think she's a good risk to make on-time payments and take reasonably good care of my property. Others can judge what they want, but trying to evaluate the risk of bringing someone on as a tenant by questioning why they receive trust income instead of "having a job like everyone else" could not work for me. No one else's life is like mine. That's all I can say.
...
In the case of a client's child, he couldn't work due to disability. He was the beneficiary of two trusts which together had a couple of million dollars, and he was going to receive several million dollars more (in trust) upon his mother's death. His mother was a trustee of one, together with an independent trustee. The other had just an independent trustee. The trustees agreed to be responsible for his rent. The landlord didn't have an issue with that.

It isn't much different from a student renting an apartment where the parents agree to be responsible for the rent.
smooth_rough
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by smooth_rough »

Its probably not worth the cost of lawyer to chase small time dead beat residential tenant for upaid rent. You can require the maximum security deposit allowed by law in your state. Requring co-signer on lease should be acceptable demand, if you have same policy for other tenant applicants of similar credit risk. If the applicant doesn't have job, that's acceptable reason to keep marketing the unit to other applicants. Why do you only have one applicant? It might be worth it for you to retain real estate agent to run tours for you if you're too busy. They might charge the equivalent amount of one month rent, but if they draw more higher quality applicants can be worth it.
placeholder
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by placeholder »

Are there no other applicants for this rental because it all seems rather complicated and there's a pretty good reason for denying this one in the bad credit rating.
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8foot7
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Re: Can a Landlord Garnish the Income from a Tenant's Irrevocable Trust for Non-Payment of Rent?

Post by 8foot7 »

neverpanic wrote: Mon Sep 19, 2022 1:50 am If she's never missed a rent payment with a 5-year rental history, that's someone I'm interested in. Assuming she doesn't destroy the places she lives, having reliable income that's greater than 4x the rent is a very attractive part of the profile. When the property manager presents the application, I'm making a judgment based on the financial profile and whether I think she's a good risk to make on-time payments and take reasonably good care of my property. Others can judge what they want, but trying to evaluate the risk of bringing someone on as a tenant by questioning why they receive trust income instead of "having a job like everyone else" could not work for me. No one else's life is like mine. That's all I can say.

OP - I hope your next applicants will be less complicated.

+1 - boiling tenants down to credit scores and W-2s is artificially limiting your pool of tenants. 5 years, no evictions, no missed payments on credit reports -- who cares what the debt is? If she didn't have debt she probably would be able to buy a house and not need to rent at all. (Despite the sometimes fervent "forever renter" group that rears its head in threads here on this forums, around this geography, generally people rent long-term because they can't buy a home, not because they want to be long-term tenants.)
It's possible, and advantageous, to "manually underwrite" tenants and not use algorithms and scores that were designed for loaning money, not putting a roof over someone's head.
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