Legal Question in Wills and Trusts in California

That's a good question; however, without reading the Trust it is impossible to answer. It sounds like your uncle is both liivng in the house in perhaps a life estate and he is also the Trustee.

If the house needs capital improvements (a new roof) that would be a Trust expense rather than a life tenant beneficiary expense and if there is no money in the Trust then perhaps a loan is prudent and appropriate. But if he is getting cash out to distribute to himself, that may not be allowed. You should consult with an attorney.

I don't quite agree with Mr. Feldman. Whether he HAS to pull it out of the trust is something the lender will dictate, and most likely they will require him to deed it out of the trust to himself during loan closing, have the deed of trust for the HELOC recorded while title is in his personal name, and then deed it back into the trust. Normally that is done by just signing all three documents at the loan closing, and the title company records them in the right order after the signing. So it goes out of the trust, the DoT attaches, and then it goes back in the trust, all within a few minutes at the recorder's office.

Whether he is ALLOWED to do that, under the terms of the trust, would require a review of the trust. If the original trustors were alive, it would very very likely be OK for them to do. However, when the original trustors have died, some aspects of the trust become irrevocable. So only a review of the trust can fully answer your question.