borrowing from Family Trust
Would appreciate your best advice/input about a family loan we're arranging. Grandmother has amassed a respectable family trust, a portion of which she is willing to loan to me to help complete our home remodel (project is in overtime and we're running out of funds, for various reasons I won't go into here). We'll be moving back into remodeled home and refinancing within the next 6-8 months or so, using the proceeds to pay off this family loan. We agree to repay the loan with interest, and to cover any capital gains tax or other expenses that grandmother will incur. The loan will also be secured by deed of trust on our remodeled house.
A portion of the trust invested in mutual funds was liquidated last week, and will be transferred to Grandmother's account of choice on Monday. She will then write me a check for the loan amount, which I will deposit in a separate interest bearing account. I am concerned that the loan funds flow in the proper manner from the trust to our account -- I worry that even a one-day stop in the wrong bank account will result in additional taxes or penalties to the trust or to grandmother.
Anybody out there with experience in this kind of transaction? Banking services are so specialized I have not been able to get a clear or comprehensive answer looking at the entire transaction from start to finish... one person I should query more is grandmother's accountant, perhaps...
I think that pretty much covers the situation and my concerns...Thanks for your thoughts - I look forward to hearing.
P.S. Grandmother has made similar loans for smaller amounts to other siblings over the years, but not from the Trust - this is the first time I have requested funds, and we have asked for considerably more (secured as well by our considerably larger asset).