Irrevocable Trust Question

[Tom McMahon]

Hi guys, first post here. Site has been great so far. Here is my situation:

In September of 2014 my parents made me the beneficiary and Trustee of an Irrevocable Trust. We put their house, which would sell for roughly $300,000 in Massachusetts, and their savings account, of around $115,000 in the IR. In the terms of the trust it says that I, the Trustee, have basically power to do whatever I want. I can invest or sell real estate, or make other investment decisions as long as it is within my fiduciary responsibilities.

The reason we did this is because my mother has fairly late stage Parkinsons and is going to require care. If we put her in a nursing home, which is an absolute last resort, we have not yet passed the 5 year look back period and their assets will be subject to Medicaid seizure when her bills start to accumulate. (Around $11k per month here in MA.)

In order to avoid this calamity, I have been thinking about purchasing a larger house with an in law, and moving me, my wife, and child in with them. 

I owe $200,000 on my home. It will sell for at least $500,000. They owe $0 on their home that is in the trust. It will sell for $300,000. We have the $115,000 sitting there. There income is gross ~$127,000 per year. Mine is ~$60,000. 

Is what I want to do possible?......

I would like to sell my house and take the $300,000 and use it as a down payment on a new, large home with an inlaw. I would like to have my father co-sign the mortgage with me, combining our incomes to ~$180,000. I can't really tell how much this will allow me to get a mortgage from a bank for. All of the calculators I use are wildly different, and have absurd changes in home buying allowances if I change my monthly debt the slightest. My and my fathers only true 'debt' is a $342 car loan that I have. We owe no other money except what we spend on regular bills. (cable/gas/elec etc.) Using that $342 puts us somewhere around the $900,000-$1.1m mark. As soon as I factor in regular living expenses of like $2,000 a month as debt it puts us around the $445,000 mark, even with $300,000 down. I just don't know about the algorithms they use.

On top of this...

I would like to sell their house. Now there will be $415,000 in the trust.  I would like to, if possible, over time buy up to 4 multi families with this money. I figure if I put $100,000 down on a $400,000 three family that is generating $~3650 per month, my mortgage and taxes and expenses will be somewhere in the neighborhood of $2,000, netting me ~$1,650 from each property I can purchase. I know I will have to stagger these investments for loan purposes I would assume. 

I guess my question is, does this make sense? Can I purchase these homes and keep them in the Irrevocable Trust as investments? Is what I am talking about crazy? 

[Tim Wilkinson]

are you considering a turnkey property or something that you can get a substantial deal with more reserve funds available at the end? Depending on which of our markets you're in will make all the difference.

It sounds like you have a lot of options. Obviously if you're in Wellesley or Dover or many other posh towns around here, you have more limited options, but you can definitely settle somewhere really decent in Eastern MA. I actually know of a place in Groveland, near Georgetown that has the in law suite and is nearly turnkey.

In regards to the MFR purchases, partner with someone who you can enroll into your purpose.