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

We Maximize Trust & Estate Distributions Saving Clients An Average of $42,000.

We Maximize Trust Distributions

We Maximize Trust & Estate Distributions, Saving Clients Thousands of Dollars.

Maximize the Distribution of a Trust or Estate!

At Commercial Loan Corporation we specialize in maximizing trust distributions and providing innovative finance options for real estate held in a trust. On average we save our clients $42,000 when it comes time to distribute a trust. Depending on the worth of the trust and real estate involved that number can be significantly higher.

Maximizing trust distributions is not all we do.

  • We also help clients preserve a parents low property tax base on an inherited property. On average retaining a parents low property tax base saves our clients over $6,200 a year in property tax payments.We are one of just a few California lenders that offers third party financing to a trust; allowing a client to take advantage of Proposition 58 and keep a parents low Proposition 13 protect property tax rate.
  • We also have specialty loan programs that enable our clients to tap into the equity in their real estate with no tax consequences.
  • We even have programs that allow you to access the equity in a home to create a “nest egg” available in case of emergency.

We offer free consultations and one of our trust & estate specialists can help you determine which options are right for you and how much you may be able to save.

Call us today at 877-464-1066!

 

Why Choose Commercial Loan Corporation?

Commercial Loan Corporation, A California Proposition 58 Lender

Commercial Loan Corporation, A California Proposition 58 Lender

Why Commercial Loan Corporation

There are several things that separate Commercial Loan Corporation from other California private money lenders. Perhaps most important is that Commercial Loan Corporation specializes in loans to trusts with the specific goal of retaining the original prop 13 tax status. There are a few lenders that consider these transactions occasionally but these loans are a small percentage of what they do. It is critically important that this transaction is done correctly to ensure that the county doesn’t reassess the property. There are a lot of mistakes that can be made if it’s not done correctly. We work directly with both the customer and the attorney to assist in this process. We have adjusted our documents with the help of numerous attorneys to provide a seamless transition when the property is distributed from the trust to the individual taking the property in the distribution from the trust. We understand the process better than most, because it’s all we focus on. And we are the lender so we make all of the decisions ourselves. You are right at the source.

Another very important thing that separates us from anyone out there is our policy on early payment. You will find that other private money lenders want to make as much interest as possible off of the transaction. This is not a bad thing. Companies are in business to make a profit. However, our policy on prepayment penalties helps us stand apart from other lenders. Most lenders, in addition to their loan costs, require a pre-payment penalty of some sort. This can be a standard 6 month or 1 year early payoff penalty or in some cases can be a specific number of months of required interest. If a lender requires that you make 3 or 6 payments of interest on a loan prior to being paid off, it is the same thing as a prepayment penalty. A requirement for certain number on month’s interest guarantees a lender that the loan will be more profitable. If a borrower is required to make a specific number of interest payments, it adds to the cost of the loan. For example, if a borrower is required to make 90 days of payments on a loan, it is the equivalent of adding 2 to 3 percent of the loan amount in loan costs.

Commercial Loan Corporation has no prepayment penalties of any kind. None. This can be extremely beneficial to the customer financially. If the money to pay the loan back is readily available we have worked with customers that pay off our loan immediately eliminating virtually any interest costs on the loan. This means that the initial fees charged for the loan is the entire cost of the loan.

Here is an example…

Say the customer has a personal line of credit available to pay off our loan from their lending institution. We can work with them to determine the best timing to fund our loan depending on the availability of their funds. If we fund our loan on Monday, they can pay off our loan on Tuesday, effectively eliminating the accrual of interest. This can be a great tool to potentially save thousands of dollars in interest payments.

We also work with the attorney and the customer to decide when to file the re-conveyance showing that the loan has been paid off. Some of the attorneys we work with want to wait to file the reconveyence (proof the loan is paid off) until they are satisfied that the county has concluded the Exemption for Reassessment of property taxes. We can accommodate the preference of the attorney in the timing of filing the reconveyence.

Don’t let any of this confuse you, we are here to answer any questions you have on the subject and look forward to helping! We tend to do business the old-fashioned way. We do what we say we’re going to do and we focus on speed and customer service.

For assistance, contact us at 877-464-1066 or call our California Account Executive Mike Riggs at 714-442-8901 or mriggs@cloanc.com.

 

Parent to Child Transfer and Exclusion for Reassessment of Property Taxes

When a Property is Held in an Illiquid Trust

When the time comes for the distribution of a family trust, often times one of the children-beneficiaries wants to hold on to real property held in the trust. Usually, the property can be transferred along with the Proposition 13 tax base. This can save several thousand dollars in property taxes. If the trust has multiple beneficiaries and there are enough liquid assets to make an even distribution, it is a relatively easy process to obtain the exclusion for reassessment by filing the proper paperwork with the county assessor (Form BOE-58-AH).

 

What if the Trust is Illiquid?Keeping the exclusion for reassessment when transferring real property to a child-beneficiary can be trickier if there are not enough liquid assets in the trust to make an even distribution. The acquiring beneficiary may want to contribute personal funds to provide liquidity in the trust for an even distribution. This may not be a good idea. The Board of Equalization (BOE) may view this as a sibling buying out the interests of another sibling(s) as opposed to a parent to child transfer. The BOE may reassess the property in this situation. So what do we do? I am glad you asked me that. The BOE allows the trust to borrow from a 3rd party (not one of the beneficiaries) to provide liquidity. The loan must be to the trust without a personal guarantee by the acquiring beneficiary. The BOE may view a loan with a personal guarantee by the acquiring beneficiary the same way it views a contribution of capital to the trust by the acquiring beneficiary.

 

Getting a 3rd Party Loan

You would think this would be easy. Unfortunately, conventional lenders (banks, mortgage companies)

do not like to lend to trusts and their Deeds of Trust are written with alienation clauses. That means when title to a property changes, the lender can call the loan due. When a trust is distributed, the title to the property will change from the trust to the acquiring beneficiary and the alienation clause would be triggered.

Another option is private money lenders (hard money). These are lenders that have investors, usually individuals, willing to lend their money for a certain rate of return. These individual investors frequently have a requirement that at least 90 days of interest be paid. Some private money lenders charge a prepayment penalty to insure their investors receive 90 days of interest. Private money lenders will typically charge 2 to 3 points on top of the interest rate. This can get expensive.

Finding a family friend or relative that is not a beneficiary and is willing to lend money to the trust may be the best option (least expensive).  Unfortunately, this may be just as difficult as finding a conventional lender willing to lend to a trust.

 

Commercial Loan Corporation will make these 3rd Party Loans?

There are not many companies doing these loans currently (October 2017). Commercial Loan Corporation in Newport Beach, California is actively lending to trusts. We do not charge prepayment penalties, so loans can be repaid quickly to avoid paying above market interest rates. These loans are not cheap and we provide a cost/benefit calculator on our website. It is important to determine how much one will save in property taxes each year versus the loan costs. The calculator will show how many years it would take to recoup all of the loan costs with property tax savings. If the property will not be held long enough to recoup all of the loan costs, it does not make sense to get a 3rd party loan. In most circumstances the property will be held much longer than the break-even point and the property tax savings will be a great benefit.

 

What are Commercial Loan Corporation’s Lending Criteria?

  • Property must be non-owner occupied.
  • Preferred loan amount does not exceed 65% of the property’s appraised value (Exceptions have been made for high credit score borrowers with liquid assets greater than the loan amount).
  • There is a plan for repayment by refinance or verified liquid assets (If refinancing, an approval letter is needed from an approved conventional lender).
  • Loans are recorded in the 1stlien position (Loans in the 2nd position are considered on a case-by-case basis).
  • Title insurance is required on all loans
  • Third party escrow is required on all loans
  • Appraisals completed for the trust may be acceptable with a review by a third party appraiser chosen by Commercial Loan Corporation.