Parent to Child Property Tax Transfer

Parent to Child Property Tax Transfers in California

Parent to Child Property Tax Transfers in California

Proposition 19 Parent to Child Transfer

Using our specialized Trust Loans, we help clients take advantage of the California Proposition 19 Parent to Child Property Tax Transfer. The Prop 19 Parent to Child Property Tax Transfer allows a child to transfer a parents low property tax base on an inherited home. On average, doing so saves our clients over $6,500 a year in property taxes.

Trust Loans in California

Normally when a person inherits a home, the County will reassess the property taxes on that home. Thanks to California Proposition 19, a child can avoid property tax reassessment if done correctly and the required documents are filed with the County quickly enough. The majority of our clients receive an inherited home from a trust, but we also help clients who are inheriting a home from probate estates. When multiple child beneficiaries are involved and there are insufficient cash assets to make an equal distribution in the trust or estate, a trust loan is usually required. We specialize in trust loans and provide the funds needed to meet the Prop 19 and California Board of Equalization equal distribution via a third party loan requirements.

Loans to Trusts

We have helped hundreds of clients avoid property tax reassessment with our loans to trust and estates. If you or your client has questions on a trust loan, we provide a free consultation that will answer all of your questions on the trust loan process. We also provide free California Board approved Continuing Legal Education to Attorneys on California Proposition 19 Parent to Child Transfers. Please call us today at 877-464-1066 for a free consultation or to sign up for our Continuing Legal Education course. If you would like to receive additional information on a trust loan, please complete our online Trust Loan form located here.

Trust Loans

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?

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.

What is California Proposition 19?

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

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.

Irrevocable Trust Loans

Lending to an Irrevocable Trust

Lending to an Irrevocable Trust

Commercial Loan Corporation is one of only a few California lenders that will lend directly to an irrevocable trust. So what is an irrevocable trust?

An irrevocable trust is a type of trust where its terms cannot be modified, amended or terminated under most conditions. Often times, an irrevocable trust will begin as a living trust and once the grantor passes, will turn into an irrevocable trust. An irrevocable trust designates a trustee and beneficiary(s). The trustee is the person who manages the trust and may also be one of the beneficiaries. An irrevocable trust is commonly used to pass assets to heirs while avoiding probate. When you transfer your assets into an irrevocable trust, you relinquish control of those assets. The trust becomes the owner of the assets at that point.

The reason why most lenders will not lend directly to an irrevocable trust is because the trust is the owner of the assets, as opposed to an individual. This become important when a child is inheriting a home from a parent and would like to use Prop 58, or Prop 19 to keep a parents low property tax base. The California Board of Equalization requires and equal distribution of assets be made when multiple beneficiaries are involved unless specific conditions are met. If there are not sufficient cash assets in the trust to make an equal distribution, then a loan against real estate in the trust will be needed to qualify for the parent to child transfer to avoid property tax reassessment.

That is where Commercial Loan Corporation comes into play. We specialize in lending to trusts and estates; specifically irrevocable trusts.  Our trust loans, allow one child to keep an inherited home with the parents low Prop 13 tax base in tact, while the other child beneficiaries receive an equal portion of cash. Everybody wins! By avoiding expensive realtor fees, each beneficiary on average receives and additional $15,000 in inheritance and the child keeping the family home saves on average $6,200 per year in property taxes.

If you, a family member or a client may be able to benefit from a trust loan, we are here to assist you and answer any questions you might have.  Please call us at 877-464-1066.

Join Us at the 2020 USC Gould Trust & Estate Conference

USC Gould Trust and Estate Conference

USC Gould Trust and Estate Conference

Please join us this November 13th for the Virtual 46th Annual USC Gould Trust and Estate Conference. We are sponsoring the event again this year and will be available to answer any questions you have on Lending to an Irrevocable Trust or Probate Estate. Our loans assist clients in qualifying for the California Prop 58 Parent to Child Exclusion from Property Tax Reassessment on an inherited home.

Tanis Alonso, one of our Trust & Estate Loan Senior Account Executives will be available for Zoom meetings during the Conference or available by phone at (877) 464-1066 to assist you and provide you with more information on our specialized lending programs. Commercial Loan Corporations is one of the only lenders in California who will lend to an Irrevocable Trusts, allowing our clients to meet the California Board of Equalization requirements to qualify for their Exclusion from Reassessment.

If you are interested in attending this years USC Gould Trust and Estate Conference, please visit their website here for more details: Trust & Estate Conference – Los Angeles

This years USC Gould Trust & Estate Conference Features Information on the following

Keynote Presentation: Bending the Arc of History with Terrence Franklin
Practical Topics: Annual Updates, Trustee and Beneficiary Harmony, Anti-SLAPP, Divorce, Stretching Retirement Savings, and Sub-Trust Allocations
CE Credit: MCLE, CPE, CFP, PFB, and CTFA (Pending)

8:30 AM – 8:35 AM (PST)
Welcome and Introductions
8:35 AM – 10:05 AM (PST)
Annual Update: Recent Developments in Probate and Trust and their Practical Applications
10:05 AM – 10:20 AM (PST)
Break Sponsored by Professional Fiduciary Association of California
10:20 AM – 11:20 AM (PST)
Love in the Time of COVID-19: Trustee and Beneficiary Harmony in Years Like 2020
11:30 AM – 12:30 PM (PST)
No-Contest Clauses and the Anti-SLAPP Statute: Traps for the Unwary
12:40 PM – 1:20 PM (PST)
Keynote Presentation Sponsored by Signature Resolution: Bending the Arc of History Towards Justice in the Probate Court
1:20 PM – 1:40 PM (PST)
Break Sponsored by Jack Barcal, Esq.
1:40 PM – 2:40 PM (PST)
Tales from the Dark Side: HELP, My Client Is Getting Divorced (or Married, or Remarried). What Do I Do?
2:50 PM – 3:50 PM (PST)
How to Stretch Retirement Savings with a CRUT
4:00 PM – 5:00 PM (PST)
Better Late Than Never? The Looming Implications of Late Allocations to Sub-Trusts

For more information on our loans to irrevocable trusts and probate estates, please call us at 877-464-1066. We can provide you or your client with a free cost benefit analysis and let them know exactly how much property saving can be attained by taking advantage of a parent to child property transfer and exclusion from property tax reassessment.

The California Parent to Child Exclusion From Property Tax Reassessment

Parent Child Exclusion From Property Tax Reassessment

Parent Child Exclusion From Property Tax Reassessment

Commercial Loan Corporation specializes in helping clients qualify for California Proposition 58’s Parent to Child Exclusion from Property Tax Reassessment with our Trust and Estate loans. You may be wondering what the parent to child exclusion from property tax reassessment is. When a parent passes and leaves a child real estate in California, Prop 58 grants the ability for a child to also inherit the parents low property tax base on the property if certain conditions are met and the appropriate documents are submitted correctly to the county tax assessors office.

How does Commercial Loan Corporation help in that situation?

Often times when there are multiple children involved and one of those children want’s to inherit the property and keep the parents low property taxes, the county assessors office will require an equal distribution of assets be made to all children. Unfortunately most Trust & Estates do not have sufficient cash assets for an equal distribution to be made and that may result in the inherited home being reassessed. Commercial Loan Corporation can assist clients in that situation. Unlike most California lenders, we specialize in assisting customers with the California Proposition 58 parent to child exclusion from property tax reassessment. In fact, we are one of the only California lenders that will lend directly to an Irrevocable Trust with no personal guarantee from the acquiring beneficiary which is often a Board of Equalization requirement when the property is held in an irrevocable trust and multiple beneficiaries are involved.

If you, a family member or a client of yours is inheriting property and are interested in transferring a parents low property tax base please give us a call at 877-464-1066. We can answer any questions you may have and provide you with a free analysis of how much your might be able to save by taking advantage of the California Proposition 58 Parent to Child Exclusion From Property tax Reassessment.

Irrevocable Trust Loans

Lender for Irrevocable Trusts

California Lender for loans to Irrevocable Trusts

Loans to Irrevocable Trusts

When it comes time to distribute the assets of an irrevocable trust, a trust loan may be needed if an equal distribution is required or desired. A trust loan provides the trust with liquidity; supplying cash so that assets do not need to be sold off or converted to cash. The trust loan is a mortgage placed against a piece of real estate held in the trust. Unlike a traditional mortgage, a trust mortgage loan is typically a short term loan. Once the assets of the trust are distributed, the beneficiary who inherited the real estate with the trust mortgage placed on it would refinance the trust mortgage with a conventional mortgage or payoff the mortgage.

Why Is An Equal Distribution Important?

When it comes to a trust distribution, an equal distribution can be important for a variety of reasons. Often times there is language in the trust that requires an equal distribution of the assets in the trust be made to beneficiaries. If the trust only contained cash, it would be easy to accomplish this. Unfortunately, most trusts that contain real estate do not have cash or other assets sufficient to create an equal distribution. In this situation, either the real estate must be sold or a mortgage must be taken out on the real estate to infuse the trust with cash. A trust loan is almost always the least expensive of the two options. Sometimes, more importantly, it also allows a beneficiary to keep a family home in the family.

Another important reason for the equal distribution of a trust is to meet the requirements of California Proposition 58. Prop 58 allows a child who is inheriting a home from a parent to avoid property tax reassessment on that home. This passes the low proposition 13 protected tax base from a parent to a child. Often times when the home is held in a trust, an equal distribution is required if a Proposition 58 exclusion from reassessment is to be granted by the County Tax Assessors office. In fact, the majority of trust loans that we provide are specifically for this reason. Our clients save on average over six thousand dollars per year in property tax savings by avoiding reassessment.

Do All Lenders Loan To Irrevocable Trusts?

No, in fact very few lenders are willing to lend to a trust, let alone an irrevocable trust. Typically when a home is held in a trust, a conventional lender will require that the property first be removed from the trust before they will lend on it. When a trust is revocable, this may not be an issue since the home can be added back into to trust once the mortgage process has been completed. Once the trust becomes irrevocable, often times the ability to do so is no longer possible and a lender who can lend to Irrevocable Trusts will be required.

When the requirements of Proposition 58 need to be considered, the situation can become even more complicated. Proposition 58 requires that the acquiring beneficiary of the real estate makes no personal guarantee on the trust loan or trust mortgage.  Doing so would be perceived as a sibling to sibling transfer of real estate as opposed to a parent to child transfer and would likely jeopardize the exclusion from property reassessment. Commercial Loan Corporation is one of the only lenders in California that provides Irrevocable Trust Loans with no personal guarantee requirements. We work directly with Trust Administrators, Trustees, Beneficiaries, Attorneys and Property Tax Consultants. If you require a Trust & Estate Attorney or Property Tax Consultant to assist you with Proposition 58, we can refer you to an expert to assist you.

Is A Trust Loan Less Expensive Than Selling A Home?

Yes, in almost all cases a trust loan is far less expensive than selling a home. Additionally a trust loan takes less time to complete than it takes to sell a home. We can complete a trust loan in as little as 10 business days. That means beneficiaries can get more money and get their funds more quickly. When you consider the ability to take advantage of the Proposition 58’s exclusion from reassessment, the savings grow even further.

We specialize in loans to Irrevocable Trusts. If you or a client are in need of a trust loan or have questions about loans to an irrevocable trust, please call us at 877-464-1066. We will provide you with a free benefit analysis and answer any question you may have.

USC Trust & Estate Conference

USC Trust & Estate Conference

USC Trust & Estate Conference

If you are attending the USC Trust & Estate Conference on 11/22/2019, please stop by our booth an speak with Tanis Alonso, our Senior Account Executive. She will be on hand to answer any questions you may have on Trust Loans and their role in the Proposition 58 exclusion from property reassessment.

This years USC Trust & Estate Conference has over 500 registrants. The conference is tailored for trust, estate planning, probate and elder law professionals. Attorneys, paralegals, trust officers, accountants, financial institution executives, private professional fiduciaries, wealth management professionals, fiduciary officers, underwriters and insurance advisers will all be on hand.

The Featured Sessions Include:

  • Annual Update: Recent Developments in Probate and Trust and their Practical Applications
  • Probate Code §2580, et seq. Whose Judgment Is It Anyway?
  • To Decant or Not Decant…That is the Question
  • Mystery in a Mumu: What Makes Your Judge Tick?
  • Tips and Tricks for Taming Basis
  • Assessing Capacity on a Sliding Scale: A Look Into Retrospective and Contemporaneous Evaluations
  • Attorneys and Other Advisors as Counselors: What They Don’t Teach You in Law School

If you are currently working with a client that might benefit from a trust loan, probate loan, estate loan or has questions about lending to an irrevocable trust; please stop by our booth and Tanis can answer any questions you have.  You may also call us at 877-464-1066.