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Trust Loans

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Trust Loans

Trust Loans in California

What are Trust Loans?

Trust Loans or Loans to Trusts are loans made directly to a trust as opposed to an individual. With a conventional mortgage, a borrower applies for a loan and signs the loan documents personally guaranteeing the loan. With a trust loan it works a little different. Instead of a borrower guaranteeing the loan, the Successor Trustee will sign loan documents on behalf of the trust and the lender lends to the trust as opposed to a person. With a trust, usually a home is used as the collateral for the trust mortgage or trust loan. Often times there is no credit check, income verification or personal guarantee involved with a trust loan.

What is the purpose of a Trust Loan?

Most of the trust loans that we provide are to prepare a trust for distribution so that one of the trust beneficiaries can avoid property tax reassessment on an inherited home. California is one of the few states that provides a property tax security measure which prevents property taxes from increasing too rapidly. In California, Proposition 13 is what achieves this. California Proposition 13 caps the maximum increase of the assessed value of a home at 2% annually. This means that over a 10 year period, if your home doubled in value from $400,000 to $800,0000; you would only be paying property taxes on an assessed value of approximately $487,500 as opposed to the current market value of $800,000. In California, the typically property tax rate is 1% of the assessed value. So in the example above, it would mean an annual property tax savings of $3,125.

California Proposition 13 has been in effect since 1978. As you can imagine, since 1978 property values have increase significantly and Proposition 13 has kept the assessed values of many homes extremely low. In addition to preventing property taxes from increasing too rapidly, California has other laws to protect residents. Proposition 19, allows a parent to transfer a home to a child and avoid reassessment on that home if it is a primary residence. This is where a trust loan becomes very important. California Proposition 19 has specific requirements that must be met if a person inherits a home from a parent and wishes to avoid property tax reassessment on that home. One of those requirements pertains to trusts and estates. The California Board of Equalization requires that an equal distribution of assets be made to all child beneficiaries unless specific language exists in the trust. Information on this can be viewed here on the California Board of Equalization website When a trust is involved, a trust loan is likely the only way to accomplish an equal distribution.

Often times when a trust contains real estate, the home is by far the most valuable asset in the trust. When there are multiple beneficiaries in the trust, that often time means an equal distribution can not be made without cash being added to the trust. The trust loan resolves this issue by injecting cash into the trust while at the same time placing a lien or debt against the real estate. This allows for one child to inherit the home while other children receive an equal amount of cash, creating an equal distribution. Since the loan is made to the trust as opposed to the beneficiary, the child inheriting the home can qualify for the Proposition 19 exclusion from property tax reassessment. On average our clients save $6,500 a year in property taxes by avoiding property reassessment.

If you are inheriting a home and are interested in keeping a parents low property tax base, we may be able to help. We have assisted over 450 clients in avoiding property tax reassessment. We work with Trust & Estate Attorneys and Property Tax Consultants across California. Call us at (877)464-1066 and we can provide you with a FREE Trust Loan Benefit Analysis that will let you know if you may be eligible to avoid property tax reassessment and how much in annual property taxes a trust loan may help you save.

Do property taxes increase when you inherit a home?

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Do property taxes increase on an inherited home?

When you inherit a home, do the property taxes get reassessed?

Do property taxes increase on an inherited home?

The simple answer is yes. When the County receives notice that ownership has changed on a home, by default a reassessment is triggered. Even more importantly, in some cases property reassessment can be retroactive to the date of death. When this occurs the person inheriting the home can be hit with a massive tax bill.

Can property tax reassessment be avoided on an inherited home?

The good news is yes, property tax reassessment can be avoided on an inherited home. Each month we help our clients avoid having their inherited home reassessed. California has laws that allow you to avoid property tax reassessment on an inherited home if you qualify and transfer the property in accordance with the Board of Equalization requirements. When multiple siblings are involved things can get a little complicated. The California BOE and County Assessors Office will often require that an equal distribution of assets be made to qualify for a full exclusion from reassessment unless specific abilities are granted in the trust. If the distribution is not equalized or if a child contributes their own funds to buyout other child beneficiaries then the property will likely be reassessed as it is considered a sibling to sibling buyout and opposed to a parent to child transfer. California has no laws that allow siblings to transfer property without reassessment, only parents to children or grandparents to grandchildren.

Commercial Loan Corporation has specialized trust loan programs designed to meet all of the BOE requirements to qualify for a parent to child transfer and avoid property tax reassessment on an inherited home. We work directly with your Attorney, Trust Administrator or California Property Tax Consultant to make sure you will avoid property tax reassessment. In fact we have helped hundreds of clients avoid property tax reassessment on an inherited home and have saved California’s over twenty million dollars in the process. We are California’s top Trust & Estate lender and even offer California State Bar approved continuing legal education on the subject.

If you, a client or a member of a trust may be interested in inheriting a home from a parent, we can provide you with a free trust loan benefit analysis. It will let you know how much you would be eligible to save from avoiding property tax reassessment on an inherited home. On average we save our clients over $6,500 each year in property taxes. The process is quick and easy and we can answer any questions that you have. Please complete our trust loan information request form or call us at 877-464-1066.

Mistakes to Avoid When Transferring a Property Tax Base

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Irrevocable Trust Loans

California Loans to Trusts

The Right Advice & The Right Trust Loan Lender 

Much to the relief of many Californians who are in the process of inheriting a home from a parent, in many case California Proposition 19 allows you keep a parents low property base on the inherited homes. However, sometimes new homeowners and beneficiaries trigger a property tax reassessment by accident, and end up facing a massive property tax reassessment. Thankfully that can all be avoided with the right advice and a loan to an irrevocable trust when one is needed. Working with Trust & Estate Attorneys and Property Tax Consultants, we have helped hundreds of clients take advantage of their Prop 19 & Prop 58 benefit with our loans to Irrevocable Trusts. In fact we have helped clients save over 21 million dollars in property taxes with our loans.

Due to rapidly increasing property values and California Proposition 13 (which helps keep property taxes low in California), we save our average client over $6,500 in property taxes each year by avoiding reassessment on an inherited home. Best of all, the process is easy and every beneficiary wins because you are able to avoid the fees associated with selling a home.

The California Parent-to-Child Exclusion

As far as parent to child transfers are concerned, when one beneficiary who is inheriting a home decides to buyout property shares inherited by co-beneficiaries (siblings) – to have complete ownership of the property, it’s easy to misstep and mistakenly trigger property tax reassessment. A parent to child property tax transfer in is line with the effort to  avoid property tax reassessment under Proposition 19’s parent-child exclusion. Therefore a loan to an irrevocable trust working in conjunction with Proposition 19 allows us to transfer property between siblings – buying out property from siblings. In many situations a loan to an irrevocable trust is needed because there is not sufficient cash assets in the trust to make an equal distribution to all child beneficiaries. That is where we come in.

Choosing the Right Trust Lender to Keep a Parent Low Property Tax  Base

Commercial Loan Corporation is one of just a handful of California lenders that will lend money directly to an irrevocable trust with no personal guarantee. We are also the only Trust & Estate Lender in California who works with hundreds of Trust & Estate Attorneys and provides them with California State Bar authorized Continuing Legal Education on the topic of Proposition 19 and lending to an irrevocable trust. If you are a client is in need of a loan to an irrevocable trust, please call us at 877-464-1066. We will answer all of your questions and provide you with a free trust loan benefit analysis.

Free Continuing Legal Education Course – California Proposition 19

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California Proposition 19 Continuing Legal Education - Free for California Attorneys

California Proposition 19 Continuing Legal Education – Free for California Attorneys

Commercial Loan Corporation Now Offers Free Proposition 19 Continuing Legal Education Online for Licensed California Attorneys

Commercial Loan Corporation offers a 1 hour presentation on the use of Parent to Child Property Tax Transfers under Proposition 19, 58 and 193. The presentation covers the use of proper calculations when equalizing distributions and use of Proposition 19’s transfer of tax base provision. This California Prop 19 CLE presentation is approved by the California Bar for 1.0 MCLE credit. Our continuing legal education is offered completely free to Attorneys and Fiduciaries. Commercial Loan Corporation is a California Lender that specializes in lending to Trusts and Estates and has helped hundreds of clients retain a parents low property tax rate on an inherited home.

Commercial Loan Corporation is a licensed provider of continuing legal education for the state of California. This course covers California Proposition 19, Proposition 58 and third party loans to trusts and estates to facilitate an equal distribution. The course can be performed online and scheduled at a convenient time of your choice during the business hours of Mon-Fri 9am-4pm.

Please contact Commercial Loan Corporation at (877)464-1066 to signup for this free California Proposition 19 CLE today.

What is California Proposition 19?

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What is California Proposition 19?

Information of California Proposition 19 and Property Tax Transfers.

California Proposition 19

So what is California Proposition 19? Proposition 19 also known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, or Prop 19 for short is an amendment to the California Constitution that impacts state property tax laws and regulations. On November 3, 2020, California voters approved Proposition 19. In simplified terms Prop 19 is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) but only if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year of receiving ownership. Additionally, Prop 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times, or once per disaster. Proposition allows the property tax base may be transferred to a property located anywhere in the state of California.

California Proposition 19 Effective Dates

Information on Proposition 19 obtained at the California BOE Website:

Section 10 of article II of the California Constitution provides that a measure approved by a majority of votes cast takes effect on the fifth day after the Secretary of State files the Statement of the Vote for the election at which the measure is voted on, but the measure may provide that it becomes operative after its effective date.1 The language of Proposition 19 for both the base year value transfer provisions and the parent-child and grandparent-grandchild exclusion provisions have specified operatives dates, as follows:
• The base year value transfer provisions become operative on April 1, 2021.
• The parent-child and grandparent-grandchild exclusion provisions become operative on February 16, 2021.
Base Year Value Transfer
Beginning on and after April 1, 2021, section 2.1(b) of article XIII A of the California
Constitution provides that an owner of a primary residence who is over 55 years of age, severely disabled,2 or a victim of a wildfire or natural disaster may transfer the base year value of their primary residence to a replacement primary residence located anywhere in California that is
1 On June 5, 2018, the voters of California approved Proposition 71, which changed the effective date of ballot measures from the day after the election to five days after the California Secretary of State certifies the results of the election. See LTA No. 2018/068. 2 Revenue and Taxation Code (RTC) section 74.3(b) defines a “severely and permanently disabled person” as “any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, and that has been diagnosed as permanently affecting the person’s ability to function, including, but not limited to, any disability or impairment that affects sight, speech, hearing, or the use of any limbs.”

California Proposition 19 Parent to Child Exclusion Chart.

California Proposition 19 Charts to help you better understand how the proposition may impact you can be found here. The following Prop 19 chart illustrates how the proposition differs from the previous Prop 58 and Prop 193 California legislation.

The California Proposition 19 Parent to Child Exclusion Chart

The California Proposition 19 Parent to Child Exclusion Chart

 

The Proposition 19 Base Year Value Transfer Chart

The Proposition 19 Base Year Value Transfer Chart

 

Assistance with the California Proposition 19 Parent to Child Transfer

Commercial Loan Corporation works with clients, Estate Attorneys and California Property Tax Consultants to help you qualify for a California Proposition 19 Parent to Child Transfer. We provide loans to Irrevocable Trusts and Probate that do not have sufficient cash assets. Our trust loan or probate loan allows for an equalized distribution to be made to all involved child beneficiaries without having a personal guarantee from the acquiring beneficiary.

If you require additional information on California Proposition 19 or if you are curious if you are eligible for the California Proposition 19 Parent to Child Transfer Benefit, we can assist you. We have helped hundreds of clients receive their benefit and save them over $6,500 per year in property taxes on average. Call us at 877-464-1066 and we will answer all of your questions. We can also provide you with a free benefit analysis and let you know how much you may be able to save in property taxes on an inherited home.

Additional California Proposition 19 Resources:

The full legislative information on California Proposition 19 – ACA-11 can be found here.
The California Proposition 19 Parent to Child Transfer Benefit Calculator

What is California Proposition 19? – PDF Download

Orange County Bar – Proposition 19 Trust Loan Presentation

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Trust and Estate - Proposition 19 Loans to Irrevocable Trusts

Trust and Estate – Proposition 19 Loans to Irrevocable Trusts

On March 7th, 2022, Tanis Alonso-Kluever will be providing a Continuing Legal Education presentation for the Orange County Bar Elder Law & Special Needs Section. Tanis is a Senior Account Executive at Commercial Loan Corporation and specializes in lending to Irrevocable Trusts and Estate so that her clients can qualify for California Proposition 19’s and Proposition 58’s parent to child transfer and avoid property tax reassessment. This presentation is approved by the California Bar for 1.0 MCLE credit.

In the presentation, Tanis will cover understanding the differences in law as they pertain to Parent to Child Transfers under Proposition 19, 58 and 193. Using proper calculations when equalizing distributions and use of Proposition 19’s “transfer of tax base” provision. We welcome any members of the Orange County Bar Association to sign up. Attached is the signup PDF.

Orange County Bar Association – Proposition 19 Loans to Irrevocable Trusts for Proposition 19

If you have questions on California Proposition 58 or Proposition 19, please call us at 877-464-1066.

Parent to Child Property Tax Transfer in California

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Parent to Child Property Tax Transfers in California

Parent to Child Property Tax Transfers in California

Perhaps the greatest benefit of California Proposition 58 and Proposition 19 is the ability those propositions grant to a parent allowing them to transfer their low property tax base to a child. On average avoiding property tax reassessment saves a child inheriting a home over $6,500 a year. In some situations that property tax savings means the difference between a child being able to afford keeping an inherited home or having to sell it.

Depending on the date of death of the parent who is transferring real estate to a child, the child may be able to take advantage of the Proposition 58 benefit or be forced to use the new Proposition 19 property tax transfer benefit. California Proposition 19 went into effect on February 16, 2021. The California Board of Equalization has created a chart (located here) to help you understand the difference between the Prop 58 and the Prop 19 parent to child transfer benefits. The two primary differences boil down to the ability to transfer a home that will not be used as a primary residence and the amount of property value that you are able to exclude from reassessment. Proposition 19 only allows a child to avoid property tax reassessment on a home that will be used as their primary residence, where Proposition 58 does not have that restriction. Additionally, Proposition 19 allows you to exclude the current taxable value plus $1,000,000; where Proposition 58 has no value limitations for a principal residence.

Often times when a trust is involved, a parent will leave a family home to multiple child beneficiaries. When that is the case and one of the children wishes to keep the family home and take advantage of their Proposition 58 or Proposition 19 property tax transfer benefit to avoid property tax reassessment, the trust may need to borrow money against the home so that an equal distribution on trust assets can be made. In many cases the California Board of Equalization will require an equal distribution of the trust assets be made in order to qualify for an exclusion from property tax reassessment. If there are not sufficient cash assets held in the trust, the trust will need to borrow the funds to make the equal distribution. Commercial Loan Corporation is one of the few lenders in California that will make a loan to an irrevocable trust.

We specialize in assisting beneficiaries and trust administrators when a loan to an irrevocable trust is required. If you would like to learn more about how a loan to a trust can help you avoid property tax reassessment on an inherited home, please call us at 877-464-1066.

Property Taxes In California

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How to Transfer a Parents Property Tax Base

How To Keep A Parents Low Property Tax Base On An Inherited Home

What is California  Proposition 13?

In the 1970s property tax hikes were completely out of control. Working class and middle class families were losing their homes because they could no longer afford to make their mortgage payments with the rapidly increasing property taxes factored in. California Proposition 13 changed all of that!

California Proposition 13, officially named the People’s Initiative to Limit Property Taxation, was amended the Constitution of California in 1978. The initiative was approved by California voters on June 6, 1978.  California Prop 13 states that the maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

Additionally and perhaps most importantly, Proposition 13 decreased property taxes by assessing values at their 1976 value and restricted annual increases of assessed value to an inflation factor, not to exceed 2% per year. It also prohibits the reassessment of a new base year value except in cases of change in ownership or completion of new construction.

By making these changes to the California Constitution, Prop 13 stabilized property taxes for home owners. People were able to predict if home ownership was going to be affordable for them now and in the future. In situations of rapidly increasing property values, like we have experience in California over the last 50 years, people were no longer in jeopardy of losing their homes due to the inability to afford the increase in their property taxes.

What is California Proposition 58 – Parent to Child Property Tax Transfer?

As time passed a new issue made itself evident. When parents passed on the family home to children a change of ownership would occur and the child who inherited the home would have the property reassessed. In many situations, this property tax reassessment would make the home unaffordable and the child would have no option but to sell the family home.

On November 6, 1986,  California’s Proposition 58 granted Californians the ability to avoid property value reassessment on inherited real estate. With certain limitations, California Proposition 58 allowed for the exclusion for reassessment of property taxes on transfers between parents and children. Proposition 58 allows the new property owner to avoid property tax increases when acquiring property from their parents. The new owner’s taxes are instead calculated on the established Proposition 13 factored base year value, instead of the current market value when the property is acquired.

What is California Proposition 19?

On November 3, 2020, California voters approved Proposition 19. Prop 19, also known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act made sweeping changes to a property owner’s ability to transfer their Proposition 13 Assessed Value and also replaced California Prop 58. The measure allows homeowners to transfers their assessed value in some situation and added new transfer provisions for victims of disasters and individuals severely handicapped. Prop 19 changed Prop 58 and limited the parent to child property tax transfer and exclusion for property tax reassessment to $1,000,000 in assessed value and to owner occupied properties. In order to receive your Prop 19 parent to child transfer benefit, the California Board of Equalization and the County Assessors Office has requirements on how the transfer is made.

Commercial Loan Corporation works with your Estate Attorney or California Property Tax Profession to help you qualify for your Prop 19 Parent to Child Transfer Benefit. We provide loans to Irrevocable Trusts and Probate; allowing for an equalized distribution to be made to all involved child beneficiaries without having a personal guarantee from the acquiring beneficiary.

Are you curious if you are eligible for the California Prop 19 Parent to Child Transfer Benefit or would like to learn more about it? We have helped hundreds of clients receive their benefit and on average save them over $6,500 per year in property taxes. Call us at 877-464-1066; we will answer all of your questions and let you know how much you may be able to save in property taxes on an inherited home.

California Proposition 19

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California Proposition 19

California Proposition 19

The President of Commercial Loan Corporation, Mr. Kerry Smith was recently published in the Orange County Register regarding California Proposition 19 and the impact made on California residents. In the article, Mr. Smith compares the new Prop 19 property tax transfer benefits to the previous benefits granted to Californian’s by California Prop 58.

Mr. Smith states “It is important to understand how Proposition 58 helps the average Californian. The majority of transfers from parent to child happen after both parents have passed. The date of passing of the last (surviving) parent will be used as the date of transfer to the beneficiaries (children). Our average client takes 17 months to settle the estate after the death of the surviving parent. During this time, the children are responsible for continuing to pay the property taxes on their parent’s home and any other property. Under Proposition 58, passed overwhelmingly by voters in 1986, a home and up to $1 million of assessed value of other property are excluded from reassessment when transferred between parents and children. This keeps the property tax bill the same.”

You may view the entire article on the Orange County Register website located here. If you or a family member are interested in transferring a parents low property tax base on an inherited home and have questions or require a loan to a trust to equalize a trust distribution, please call us at 877-464-1066.

Lending for Probate Estates & Irrevocable Trusts in California

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Loans to Probate Estates and Irrevocable Trusts

Loans to Probate Estates and Irrevocable Trusts

Finding financing for Probate Estates and Irrevocable Trusts in California can be complicated. Most lenders are unwilling to lend on a property until the estate has been settled. The same problems exist for real estate held in an Irrevocable trust; conventional lenders will require the home be removed from the trust in order to provide financing and doing so is likely to jeopardize your ability to take advantage of the Proposition 19 parent to child transfer exclusion. Our private money loans help solve these complex issues. We lend to probate estates and directly to irrevocable trusts, providing the cash needed for trust administrators and beneficiaries to keep a family home and transfer a parents low property tax base.

We are California’s top Trust & Estate lender and have saved Californian’s over $7,800,000 in property taxes by avoiding property reassessment. We specialize in providing clients with the financing needed to qualify for California Proposition 19’s parent to child property tax transfer. Our average client saves over $6,800 each year in property taxes and if you are inheriting a home from a parent, we may be able to assist you as well. We offer competitive rates, have no personal guarantee requirements, offer affordable interest only payments with absolutely no no prepay penalties or minimum interest requirements.  We are here to help!

Call us at (877) 464-1066 and we can assist you or your client with a loan to a probate estate or irrevocable trust. We will help you determine your property tax savings, provide you with a free cost benefit analysis and answer any questions you may have on the process.