Always Watch Out For Prepayment Penalties

Trust and Estate Loans - Beware of Prepayment Penalties

Trust and Estate Loans – Beware of Prepayment Penalties

Trust and estate mortgages provide liquidity to an otherwise illiquid trust. This cash infusion to the trust or estate allows for an even asset distributions to be made. The equal distribution of a trust or estate becomes critical when one of the beneficiaries or heirs wants to take advantage of California Proposition 58 (parent to child property transfer) and benefit from an exclusion for property tax reassessment. Depending on the property’s current value, the parents assessed property tax value and the property tax rate; doing so could mean a savings of thousands or even tens of thousands of dollars annually! Here is an example of how it works.

Proposition 58 Exclusion From Property Tax Reassessment Example

Say your parent initially purchased the home for $75,000 and over the years the home has increased in value to $850,000. Thanks to California’s Proposition 13, the property’s tax assessed value can not increase by more than 2% annually. So even though the actual value of the property is $850,000 the County’s assessed value for property tax purposes may be only $112,000 (as an example). If the property tax rate for the area is 1.2% here is what you would be looking at:

Current Property Taxes = $112,000 x 1.2% = $1,344
Property Taxes If Reassessed = $850,000 x 1.2% = $10,200
Proposition 58 Exclusion From Reassessment Annual Tax Savings = $8,856

So if an equal distribution of the trust or estate can be made allowing for the child inheriting the property to qualify for the Proposition 58 exclusion from property tax reassessment, the savings in property taxes can be significant!

Finding the right Trust or Estate Loan

When it comes time to take out a trust, estate or probate loan, you have a few options and choosing the right private money or hard money lender may save you potentially thousands of dollars in fees and expenses! In almost all cases, Trust and Estate loans are intended to be short term financing options. The lender provides the trust or estate with cash, the assets of the trust or estate are distributed equally, and the beneficiary or heir files for the parent to child exclusion from property tax reassessment. Once the exclusion is granted, they are then able to refinance the trust or estate loan with out jeopardizing the low property tax rate that was transferred from the parent. Since these are short term loans, many of our competitors have chosen to charge prepayment penalties to make additional income on the loan. Worse yet, some trust and estate lenders will disguise their prepayment penalty by referring to them as minimum required months payments or set a minimum amount of interest requirement. Depending on the loan amount, those prepaid or required interest charges could add up to several thousand dollars. Commercial Loan Corporation charges NO prepayment penalties and has NO minimum interest requirements. Instead we do our best to provide you with flexibility when it comes to paying off your loan. In fact we will even recalculate your monthly payment for you if you pay down your trust or estate loan mortgage balance, allowing you to save on interest payments!

To learn more about trust and estate loans and why Commercial Loan Corporation is your best option when it comes to a trust or estate mortgage, please call us at 877-464-1066 or complete our trust and estate information request form at www.cloanc.com.

Trust & Estate Loan Benefit Calculator

Trust and Estate Loan Benefit Calculator

Trust and Estate Loan Benefit Calculator

Trust & Estate Loan Calculator

Are you are considering taking out a third party loan in order to equalize a trust or estate distribution and take advantage of California’s Proposition 58’s exclusion for Property Tax Reassessment? The act of doing so has saved some of our clients thousands of dollars annually and in most situations it makes sense to do so if you plan on keeping the home for more than just a few years. To make sure that the loan is financially beneficial, it is important to compare the costs of the loan with the expected property tax savings. At Commercial Loan Corporation we do not want to provide a loan to a client if it is not in their best interest and that is why we have created the Trust & Estate Loan Benefit Calculator.

Our easy to use trust mortgage calculator only requires you to enter a few fields of information and then does the rest of the work for you! Simply input the current value of the property in question, the number of siblings who have an interest in the property, the existing low Proposition 13 protected property tax rate and your desired loan amount. From there we can estimate everything from your Prop 58 Property Tax Savings, your proposed loan costs and the time it will take you to recoup your loan expenses. Here is an example of what our easy to use Trust Loan Benefit Calculator looks like:

Trust Loan Calculators

Trust Loan Calculators

Try Out The Trust & Estate Loan Benefit Calculator

Our Trust & Estate Loan Benefit Calculator is free and easy to use. Click here to try it our for yourself. If you have any problems using the calculator, or have questions on trust or estate loans or would like to start the loan process, please call us at 877-464-1066. The Trust Loan Calculator is meant for estimation purposes only. When we speak with you, we will provide you with a detailed trust loan cost estimate and help you to determine you exact Proposition 58 property tax savings. Often times we are able to complete your trust loan process in under 10 days!

 

CALIFORNIA PROPOSITION 58 INFORMATION

California Proposition 58 Trust Loans

California Proposition 58 Information

What is California Proposition 58 and how may it benefit you?

On November 6, 1986, California Proposition 58 became effective. Proposition 58, with certain limitations, permits the exclusion for reassessment of property taxes on real estate transfers between parents and children. California Proposition 58 is codified by section 63.1 of the California Revenue and Taxation Code. In the State of California, real estate or real property is reassessed at market value if it is sold or transferred. Property taxes can sometimes increase dramatically as a result of a property tax reassessment. Per Prop 58, if the sale or transfer is between a parent and their child, under limited circumstances, the property will not be reassessed, providing certain conditions are met and the proper application is filed in an appropriate amount of time. California 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, as opposed to the current market value.

It is important to be aware that there are some limitations to California Proposition 58. For instance, on non primary residences transfers are limited to the first $1 million of real property. The $1 million exclusion applies separately to each eligible transferor. These transfers may be the result of a sale, gift, or inheritance. A transfer via a trust also qualifies for this property tax reassessment exclusion. Additionally, for Proposition 58 there are limitations for who is eligible to receive these tax benefits. Here are the existing guidelines for Prop 58 relationship eligibility: A “child” for purposes of Proposition 58 includes any child born of the parent(s), any stepchild while the relationship of stepparent and stepchild exists, any son-in-law or daughter-in-law of the parent(s), and any adopted child who was adopted before the age of 18. Spouses of eligible children are also eligible until divorce or, if terminated by death, until the remarriage of the surviving spouse, stepparent, or parent-in-law. For California Proposition 193, an eligible “grandchild” is any child of parent(s) who qualify as child(ren) of the grandparents as of the date of transfer.

There are additional factors that are important to consider when it comes to California Proposition 58 eligibility. For instance, the acquiring beneficiary can’t lend money to the trust when funds are needed to make an even distribution of the trust. The reason why is that the Board of Equalization views this act as a child buying out another child as opposed to a parent to child transfer. The child would no longer be eligible for the exclusion of property tax reassessment because the exclusion for reassessment requires a transfer be from parent to child. Often times the only solution in this situation is for the trust to take out a mortgage on real estate located in the trust to supply the trust with the cash needed to make an even distribution. This is not as simple as it sounds. The acquiring beneficiary does not own the property because the real estate is held in the trust. Almost all conventional lenders are opposed to lending to trusts. They will typically ask the trustee to put the title in the name of the acquiring beneficiary before funding their loan. If this is done before the even distribution of the trust, the exclusion for reassessment will usually be denied. Commercial Loan Corporation can help in this situation. Commercial Loan Corporation is one of just a handful of California Lenders who are willing to provide loans to trusts; in fact, we specialize in it.

What separates Commercial Loan Corporation from other Private Money Trust Mortgage Lenders is that our Trust Loans are specifically designed with our clients needs in mind. Our trust and estate mortgages enable our clients to take advantage of the Proposition 58 property tax benefits while at the same time avoiding steep pre-payment fees and interest rate expenses charged by many of our competitors. Commercial Loan Corporation charges no pre-payment penalties or specified required months interest prior to loan payoff. Additionally, we permit our clients to pay down their mortgage and will recalculate their mortgage payment for them based on the outstanding mortgage balance. This benefit alone can save our clients potentially thousands of dollars in interest.

If you, a client or someone you know could benefit from a trust loan, please call us at 877-464-1066 or complete the trust mortgage inquiry form located here.

Estate Loans, Probate Loans, Trust Loans and Inheritance Loans

Estate Loans, Probate Loans, Trust loan and Inheritance Loans

Estate Loans, Probate Loans, Trust loan and Inheritance Loans

Estate Loans, Probate Loans, Trust Loans and Inheritance Loans

If your inheritance includes real estate and you want to preserve your parents or grandparents low property tax rate; there are finance options available to assist you. These loans programs often go by different names but are most commonly referred to as inheritance loans, estate loans, probate loans, or trust loans. In some cases they will also be referred to as hard money loans, private money loans or 3rd party loans for trusts.

Estate, probate, inheritance and trust loans are typically more difficult to come by than conventional real estate mortgages. Often times in order to receive financing on real estate held by a trust, in probate or in an estate, you need to utilize a private money lender. These types of loans are typically intended to be used as short term financing options to provide liquidity to an estate or trust when one is trying to qualify for exclusion for reassessment of property taxes. Once the real estate has been transferred to the beneficiary or heir and the exclusion for property tax reassessment has been secured; that is when the loan is refinanced into a conventional mortgage.

It does not always make sense to utilize a private money, hard money, trust loan, estate loan or probate loan; but there are situations when it does. The most common reason to do so is when dividing the assets of a trust or estate and there is not sufficient cash liquidity to achieve an equal distribution. For instance, one heir or beneficiary may wish to retain ownership of a property. If that is the case and there is not sufficient assets remaining for an equal distribution to the other parties involved; taking out a mortgage on the property may be the best option.

Providers of inheritance loans, estate loans, probate loans, and trust loans

Inheritance loans, estate loans, probate loans, and trust loans are specialized types of real estate mortgages. It can be difficult to find lenders willing to provide this type of financing. Commercial Loan Corporation specializes in this type of lending. Best of all, unlike many other private money lenders, Commercial Loan Corporation does not charge a pre-pay penalty or have a minimum interest requirement which can be costly. If you or your client is looking to obtain a trust loan, probate loan or estate loan, please call us at 877-464-1066 so that we may assist you. To view testimonials from some of our past clients, please view them here.

For additional information on estate loans, probate loans, and trust loans please complete the trust and estate loan inquiry form located here

 

Retaining A Parents Proposition 13 Property Tax Rate When Inheriting A Property In A Trust.

Trust Loans, Estate Loans and Probate Loans

Commercial Loan Corporation – Mortgages For Trusts, Estates and Probate. We can assist you in retaining your Proposition 13 tax rate.

Retaining A Parents Low Proposition 13 Property Tax Rate

When inheriting a property, the ability to retain your parents or grandparents low Proposition 13 tax rate can be extremely desirable. In fact, in many cases preserving the lower property tax rate can mean a savings of thousands of dollars per year. Unfortunately, this process can also be complicated to achieve in some situations.

California Proposition 58 permits the transfer of real property between parents and children and grants an exclusion for property tax reassessment in some cases. The process of obtaining the exclusion for property tax reassessment becomes an issue for many people when the real estate is held in a trust with multiple beneficiaries and not enough liquid assets to make an even distribution to all of the beneficiaries. That is where Commercial Loan Corporation can help.

Commercial Loan Corporation provides mortgages to trusts and estates. Our trust loan infuses the trust with cash allowing for the equal distribution of the trust and permitting one of the trustees to take possession of the real estate. The process helps to make the individual eligible for a proposition 58 exclusion for property tax reassessment allowing him or her to preserve the parents low proposition 13 tax rate. In addition to loans to trusts, Commercial Loan Corporation also provides estate loans and probate loans to help protect a parents low property tax rate when it is being transferred to a child.

If you or a client of yours could benefit from a probate loan, estate loan or mortgage on a property held in a trust, please have them call us at 877-464-1066 or complete a request for additional information on our website here.