We Make Loans To Irrevocable Trusts Easy

California Lender for Loans to Irrevocable Trusts - The Cash You Need To Distribute A Trust

Commercial Loan Corporation is a California Lender specializing in Loans to Irrevocable Trusts. We lend the cash you need to distribute a trust and receive your proposition 58 exclusion from property tax reassessment on an inherited home.

Loans to Irrevocable Trusts in California

When it comes time to distribute an irrevocable trust and funds are needed to make an equal distribution, you will find that most lenders are unwilling to lend on real estate that is held in a trust. This becomes extremely problematic if you plan on filing for a California Proposition 58 exclusion from property tax reassessment on real estate being inherited from a parent.

One of the requirements to qualify for an exclusion from property reassessment is for the trust to make an equal distribution of the trust assets to all child beneficiaries. Often times that is not possible to do if one of the trust assets is an expensive piece of California real estate. In the situation where a home is creating an unequal trust distribution, a mortgage or third party loan must be taken out to infuse the trust with enough cash so that the equal distribution can be made. That way one child receives the encumbered property while others receive cash and or other assets, equalizing the distribution of the trust. The state does not allow for the acquiring beneficiary to use their own funds to equalize the distribution. Doing so would create a sibling to sibling buyout and make the beneficiary ineligible for an exclusion from reassessment. That is why a third party loan is required. The problem is that most California lenders will require that the property be removed from the trust in order to lend on the home. Unfortunately, once that is done, you have jeopardized your ability to qualify for the Prop 58 property tax reassessment exclusion since the assets of the trust were distributed unevenly at that point.

The solution is to have a mortgage placed on the home while the property is still held in the irrevocable trust. That is where Commercial Loan Corporation comes in. We are a leading California lender of mortgages for homes held in an irrevocable trust. What makes us unique is that we lend to the trust as opposed to a beneficiary; allowing the beneficiary to qualify for the California Proposition 58 exclusion from property tax reassessment on a home inherited from a parent.

If you, a client, or someone that you know is in need of a loan to a trust, please have them call us at 877-464-1066. We specialize in the process and can answer any questions that they may have. We can also provide them with a free loan benefit proposal. The proposal compares the cost of the trust loan to the benefits received from a Prop 58 parent to child property transfer, ensuring that the trust loan is beneficial.  We can also determine how much additional funds you would receive by maximizing your trust distribution. On average we help clients distribute an additional $42,000 to beneficiaries my maximizing their trust distribution.

Call Us At 877-464-1066

Avoid Property Tax Reassessment On An Inherited Home

Avoid Property Tax Reassessment With California Proposition 58

Avoid Property Tax Reassessment On A Home Your Inherit From Your Parents

How to avoid property tax reassessment on a home you inherit from your mother or father in California

One of the biggest mistakes that most Californians make when inheriting real estate from a parent is not taking advantage of California Prop 58. In fact even some Estate Planners, Attorneys and Fiduciaries do not fully understand the full benefits and how to navigate Proposition 58. California Proposition 58 provides Californians with the ability to avoid property reassessment when inheriting a home from a parent.

Why is Proposition 58 and the ability to avoid property tax reassessment so important?

Avoiding property reassessment means you assume the existing property tax valuation that your parent had. With how rapidly property values have appreciated in California over the last 50 years, avoiding reassessment can mean an enormous tax savings. For instance, lets say that your parents purchased their home in 1980 for $180,000. Because of California Proposition 13, the county can not reassess a home more than 2% per year while held by the same owner. For this example we will estimate the county has the home you are inheriting assessed at $250,000. If the County property tax rate is 1.2%, that means the yearly property taxes on the home are just $3,000.

If you inherit the property from your parents, and you or your legal representation do not submit a request for an exclusion from reassessment and the home is currently valued at $1,250,000, your annual property taxes will jump to $15,000! That is a difference of $13,000 per year in property taxes that you could potentially be avoided. To compound the issue, property assessment values can be reassessed upwards by 2% annually. So the following year if that occurs, your property taxes will increase by another $300 as opposed to just $60 if you had received your exclusion from reassessment. Over 10 years that can really add up.

How can Commercial Loan Corporation help with Proposition 58 and an exclusion from Property Tax Reassessment?

California Proposition 58  has eligibility requirements. A process needs to be done correctly and proper documentation needs to be filed in order to receive and exclusion from property reassessment on a parent to child transfer of real estate. One of the stipulations is that when a parents home is held in a trust, an equal distribution of the trust assets must be made to qualify for Proposition 58. An important side note is that the beneficiary receiving the property can not use their own funds to create an equal distribution. If this is done, the assessors office views it as a property transfer between beneficiaries as opposed to a parent to child transfer, making it ineligible for a Proposition 58 exclusion from reassessment. Instead, the California Board of Equalization requires that a third party loan be used to provide the trust with sufficient cash for an equal distribution to be made. This information can be found on the California Board of Equalizations website at the following link that addresses questions and answers regarding California Proposition 58.

California Board of Equalization Website Information on Prop 58: BOE website document link

“When a trustee or estate administrator has the power to distribute trust assets on a pro rata or non-pro rata basis, the distribution of real property to one child  qualifies for the parent-child exclusion if the value of the property does not exceed that child’s interest in the total trust estate. A trustee who elects to make a non-pro rata distribution may equalize the value of the other beneficiaries’ interests in the trust assets by encumbering the real property with a loan and distributing the loan proceeds to the other beneficiaries. However, a loan cannot be made by any of the beneficiaries of the real property to the trust in order to equalize the trust interests. Such loan would be considered payment for the other beneficiaries’ interests in the real property resulting in a transfer between beneficiaries rather than a transfer from parent to child, which would disqualify the transfer from the parent-child exclusion.”

Commercial Loan Corporation is one of the only lenders in California that provides loans to trusts with out the requirement of a personal guarantee. This unique mortgage product allows an illiquid trust to become liquid and for the inheriting beneficiary to qualify for the benefits of Proposition 58 by meeting the parent to child transfer requirement. Unlike other lenders, we specialize in Proposition 58 loans. Our trust loan enables a beneficiary to encumber the inherited home and infuse the trust with the cash needed so that an equal distribution can be made and they can qualify for the parent-child exclusion and avoid a property tax reassessment with Proposition 58.

Call Us Today For Assistance

If you have any questions on the process of obtaining a loan for a property held in an irrevocable trust, please call us at 877-464-1066. One of our Proposition 58 loan specialists can answer any questions you may have. We can also provide you with a no cost trust loan benefit proposal. The proposal will show you how much you could save by optimizing your trust distribution. On average we save our clients over $6,000 per year in property taxes and $40,000 in additional distributions to beneficiaries. Let us help you avoid property tax reassessment!

Call 877-464-1066 or Click Here to request additional information.

Free Continuing Legal Education for Attorneys & Fiduciaries

Free Online Continuing Legal Education

Free Online Continuing Legal Education

Free Continuing Legal Education Online

Commercial Loan Corporation has partnered with Michael Wyatt to provide continuing legal education to Attorneys and Fiduciaries. Michael Wyatt is a California Property Tax Consultant with over 20 years of experience working in a California Tax Assessors Office. Commercial Loan Corporation is a California Lender that specializes in lending to Trusts and Estates. We are the leading provider of Mortgages to Real Estate held in a Trust to help clients retain a parents low property tax rate on an inherited home.

We are a licensed provider of continuing legal education for the state of California. Our course covers the pitfalls in change of ownership as well as third party loans to trusts and estates to facilitate an equal distribution and transfer of property tax base from a parent to child via an exclusion from property value reassessment. Even better, the course can be performed online and scheduled at a convenient time of your choice during the business hours of Mon-Fri 9am-4pm.

Presentation Name: A Jet Tour through the Mine Fields and Pitfalls of Change of Ownership for Trusts, Legal Entities, Estates and Probates
Credits:1 Hour MCLE

Please contact Tanis Alonso at 714-442-8995 or via email at talonso@cloanc.com and get signed up today!