Non Pro Rata Distribution Loans For Trusts and Estates

Non Pro Rata Distribution Loans For Trusts and Estates

Non Pro Rata Distribution Loans For Trusts and Estates – Call Commercial Loan Corporation at 877-464-1066

Non Pro Rata Distribution Loans For Trusts and Estates

Commercial Loan Corporation is one of California’s leading providers of loans to trusts and estates. Our specialized mortgage infuses a trust or estate with cash so that a non pro rata distribution can be made. A non pro rata distribution occurs when each heir or beneficiary receives an equal proportion of the entire estate or trust distribution but not of each asset. When a trust or estate does not hold sufficient cash assets, our loan provides the trust or estate with the cash needed to equalize the distribution or payout of the estate. This allows one of the beneficiaries or heirs to keep an inherited home and take advantage of the Proposition 58 tax benefit; which allows the California Proposition 13 protected low tax base from their parent to be transferred to the child who is inheriting the home.

On average our Non Pro Rata Trust Distribution and Probate Estate Distribution Loans save clients over $6,200 per year in property taxes. Our process is quick and easy.  In fact we can often times complete a non pro rata loan in as little as 7 business days. Our loan is made directly to the trust.

If you, a family member or a client that you represent requires a California Proposition 58 Non Pro Rate Distribution Loan, please call us at 877-464-1066. Even if you are attempting to distribute and irrevocable trust, we have loan programs that can assist you. We can answer any questions you have on our non pro rate distribution loans and provide you with a free cost benefit analysis to see if one of our trust and estate loans makes sense for you.

 

PROPOSITION 58 – CALIFORNIA REVENUE AND TAXATION CODE SECTION 63.1: PARENT-CHILD TRANSFERS

California Proposition 58 Parent to Child Transfer

California Proposition 58 Parent to Child Transfer

California Proposition 58 – Transferring Real Estate & Property Tax Base From A Parent To A Child & The Need For A Loan To Equalize A Transfer. 

On November 4, 1986, the voters of California adopted Proposition 58, which added
subdivision (h) to section 2 of article XIII A of the California Constitution. Subdivision H provides that “purchase” and “change in ownership” do not include the purchase or transfer of a principal residences between parents and children, and that the first one million dollars of the full cash value of all other real property (other than principal residences) between parents and children. Section 63.1 was added to the Revenue and Taxation Code 1 to implement the parent-child exclusion provisions of California Proposition 58 and applies to any purchases or transfers between parents and children that occur on or after November 6, 1986.

The California Board of Equalization who administers Proposition 58 offered guidance to clarify some of the ambiguity of the law. They generated a Questions and Answers document for the California Assessors offices to help them properly handle Prop 58 requests for Parent to Child Transfers and requests to avoid property tax reassessment. California Proposition 58 allows a child to inherit a property from a parent, transferring the home and avoiding tax reassessment. This allows the child to keep the parents low Proposition 13 property tax base. One of the requirements of Prop 58 that the Board of Equalization addressed was the need for an equal distribution to be made when multiple beneficiaries are involved. This information can be found on Page 11 – Question 36 of the board of equalization question and answer document. The document can be located here.

California Proposition 58 Questions and Answers

Or at the California Board of Equalization Website – Located Here

Question 36 from the Board or Equalization addresses the following issue:

“A trust allows for non-pro rata distribution. However, the estate is composed primarily of a house and a small savings account. One child wants the real property and one 15 See Simms v. Pope (1990) 218 Cal.App.3d 472, 477; Domenghini v. County of San Luis Obispo (1974) 40 Cal.App.3d 689, 695. 16 Letter To Assessors 91/08. 17 Estate of Russell (1968) 69 Cal 2d 200. Page 11 REVENUE AND TAXATION CODE SECTION 63.1 QUESTIONS AND ANSWERS child wants cash. To equalize distribution, can the trust encumber the real property with a loan and will the transfer of real property still qualify for the parent-child exclusion?

Answer: Yes. When a trustee 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.18 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.

This is where Commercial Loan Corporation can assist you. A conventional loan can not be used in this situation, since conventional lenders will not lend directly to a trust or estate, and the BOE requires that the loan not be made to the beneficiary but instead to the trust or estate. We are one of the only California lenders that will lend directly to a trust or estate, as opposed to a beneficiary. Our loan enables the beneficiary who is inheriting the property from a trust or estate to avoid a transfer between beneficiaries.  This helps them qualify for the Proposition 58 Parent to Child Transfer, enabling them to keep a parents low Proposition 13 tax base. Our average client saves over $6,000 a year in property taxes by taking advantage of their Prop 58 property tax benefit. We will even lend to an irrevocable trust.

If you, a family member or a client may be interested in a loan to help assist with Proposition 58, please call us at 877-464-1066 and we can assist you.

 

Join us at the 41st Annual UCLA / CEB Estate Planning Institute on 5/3/2019

Estate Planning Institute

Estate Planning Institute

Commercial Loan Corporation will be attending the 2019 – 41st Annual UCLA / CEB Estate Planning Institute at the Marriott in Marina del Ray.  If you will be attending the event please visit our Senior Account Executive, Mike Riggs at our booth.  Mike will be available to answer any questions you may have on our trust & estate loan programs; including our Proposition 58 loans that can allow for an equal distribution of a trust or estate so that a child can keep a parents low property tax base value on an inherited home. If you will not be attending the Estate Planning Institute event, but have questions on California Proposition 58, please call us at 877-464-1066 and we would be happy to assist you.

 

Information on California Proposition 58 & Avoiding Property Reassessment

California Proposition 58 Avoiding Property Tax Reassessment

California Proposition 58 Avoiding Property Tax Reassessment – Call 877-464-1066 For Assistance

California Proposition 58 Property Transfer & Avoiding Reassessment

California Proposition 58 provides California property owners with the ability to transfer real estate and a low property tax base between a parent and child. There are requirements to qualify for the benefits of Prop 58 and limitations to the benefits granted. Thanks to the assistance of Michael Wyatt who worked in the Orange County Tax Assessors office for nearly 25 years, we have compiled a list of some of the most common mistakes made when filing for an exclusion from property value reassessment and misconceptions about how California’s Proposition 58’s Parent to Child Transfer works. The following information is not legal advice. Every situation is different and we highly recommend that you contact an attorney or property tax consultant before taking any action. If you require assistance, please call us at 877-484-1066 and we can place you in contact with a qualified party to help you.

Commercial Loan Corporation is one of only a few California lenders in existence that provides loans and mortgages to trusts and estates. These trust loans allow for a Proposition 58 parent to child transfer to be granted by providing the cash needed for the trust to make an equal distribution to all beneficiaries.  If you would like more information on our trust and estate loan programs, please call us at 877-464-1066 and we can answer any questions you may have and also provide you with a free Trust Loan Benefit Proposal. The proposal will calculate how much you may be able to save by taking advantage of the California Proposition 58 Parent to Child Exclusion for Property Tax Reassessment.

Proposition 58 Parent to Child Transfer Most Common Mistakes 

1. Filing a claim for an exclusion from property tax reassessment too late

Filing for a Proposition 58 exclusion from property reassessment is time sensitive and may be an urgent matter. You have three years; or six months from a Supplemental Notice of Assessment or Escape Assessment. If you have exceeded this time frame you may still be able to petition for your benefits.

2. Not keeping track of each “eligible transferor’s” $1 million limit

Exceeding the $1 million limit can trigger a tax reassessment on a property. The million dollar limit is associated with the transferor and not with the property.

3. A parent owns a home. He or She creates an LLC in which the parent and his/her two children equally own 33.33% of the LLC. He or She then transfers the real property to the LLC.

The California Board of Equalization has very specific requirements for how the transfer of real estate must occur and the order it must occur in if a parent to child exclusion is to be granted. In this situation the parent must first add the children on to title and then apply for the parent to child exclusion prior to placing the home into the LLC. Before proceeding with a property transfer it is recommended that you contact a Property Tax Consultant such as Michael Wyatt if you have any questions or concerns regarding your Proposition 58 Parent to Child transfer eligibility and to make sure that it is not jeopardized.

4. Filing a claim where the transferred property will be assessed at its current market value where its market value had fallen below the transferor’s original Proposition 13 factored base year value.

It is very rare in California, but in some extreme situations of declining property value, it may not be of benefit to file for an exclusion from property reassessment. Call us at 877-464-1066 and we can help you determine if filing for your Property 58 exclusion or taking out a trust loan is beneficial for you and how much you may be eligible to save in property taxes.

5. A person over 55 sells his/her long-time original residence to his child. He/she first applies for and is granted the Parent-Child Exclusion. He/she then buys a replacement residence and applies to transfer the base year value under Proposition 60 to his or her replacement property.

After transferring an interest in the property to the child, the parent is no longer eligible to qualify for the California Proposition 60 benefit. California Proposition 60 requires that the original residence must be “sold” to qualify. By previously qualifying for the Prop. 58, the property is viewed as a transfer and not as a sale of the original residence.

6. A person owns several low-value small condominiums. He or she also owns several high-value apartment complexes. He or she transfers these condominiums to a child and applies for and is granted the Parent-Child Exclusion, thereby reducing the $1 million limit for the apartment complexes.

California Proposition 58 limits how much real estate can be transferred from a parent to child while still avoiding reassessment. In a complicated situation where several pieces of real estate are involved with multiple child beneficiaries; it may make sense to consult a property tax consultant. Doing so may help you maximize the benefit received from a parent to child transfer while adhering to the Proposition 58 transfer limits.

7. Two parents own real estate through the medium of their trust. The father dies in 1995. The mother dies in November 2017. The successor trustee files the Parent-Child Exclusion claim, and only reports the mother’s $1 million. The trustee forgets to also include and report the father’s $1 million, to get a total of $2 million.

California Proposition 58 permits each parent with property ownership to transfer $1 million in property value, allowing their child beneficiary to avoid property tax reassessment.

8. A trust agreement specifies that after a mother passes away, her trust shares are to be distributed equally to her three children, A, B, and C. The children decide that A is to get the real property, and B & C wish to get cash, but the trust does not have equal portions of real estate and cash for each child. The children contact a conventional institutional lender. The loan officer says they don’t lend to a trust. The loan officer advises the family to first take the real property out of the trust. The lender will then loan money to A so that B & C can receive cash.

Once the property is taken out of the trust, the distribution has been made with out an equal distribution occurring and child A will only be eligible for a 33% exclusion. In order to get the full exclusion, a 3rd party loan must be made directly to the trust with no personal guarantee from a beneficiary. Once the trust has received the funds from the loan, an equal distribution of equity in the real estate to child A and cash to child B & C can be made allowing for a 100% exclusion. Commercial Loan Corporation is one of just a few California lenders that will lend directly to a trust with no personal guarantee from a beneficiary, allowing a child inheriting a property to qualify fro a Proposition 58 exclusion from reassessment and keeping a parents low Proposition 13 property tax base.

9. Sending an incomplete request package to the Assessor, delaying the granting of Parent-Child benefit.

Depending on the complexity of the trust or estate, the County may require a variety of supporting documentation in order to grant a Proposition 58 parent to child transfer property tax exclusion for reassessment. If the submitted package is incomplete or not filed correctly, the request will be rejected. We advise that you contact a California Property Tax Consultant such as Michael Wyatt or an Attorney if you are unsure if you are filing the request properly. Call us at 877-464-1066 and we can put you in contact with a qualified attorney or property tax consultant to assist you.

10. Failing to included subsequent amendments and restatements along with a copy of the trust when submitting your request for a California Proposition 58 parent to child transfer exclusion.

When submitting trust documentation to the County, it is important to include the entire set of trust documents. Not including any existing amendments or restatements may result in a rejection of the request.

11. Not including a copy of death certificate for one of children/heirs listed in the trust agreement who has passed away prior to distribution.

When submitting documentation to the County for an exclusion from reassessment, it is important to include supporting documents as well. The County will require evidence to support the claims made in the request form. Some of these documents may include death certificates, evidence of a third party loan and trust documentation.

If you have any questions or require assistance, please call us at 877-464-1066 and we will do our best to assist you!

Additional information on California Proposition 58 can be viewed here:
California Proposition 58 Information

 

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.

Orange County Bar Association Trust & Estate 2018 Holiday Social

Orange County Bar Association Trust & Estate 2018 Holiday Social

Please Join Commercial Loan Corporation at the Orange County Bar Association Trust & Estate 2018 Holiday Social

Orange County 2018 Holiday Social

Please join Commercial Loan Corporation at the 2018 Orange County Bar Trust & Estate Holiday Social. The event is being held on December 6th, 2018 at the Ocean Institute in Dana Point. Both Mike Riggs and Tanis Alonso will be attending the event from the Commercial Loan Corporation Trust & Estate Lending Department.  They can answer any questions that you may have on our loans to trusts and estates. We are experts on 3rd party financing to trusts and estates to help our clients preserve a parents property tax base on an inherited home.

Third Party Trusts & Estate Loans To Keep A Parents Property Tax Base On An Inherited Home.

If you will not be able to attend the Trust & Estate Holiday Social, but would like more information on our trust loans, estate loans or a loan to a home in probate; please call us at 877-464-1066. We can give you a free estimate on how much you might be able to save by preserving the property tax base on an inherited home. We assist both clients and attorneys with matters regarding California Proposition 58. For additional information on our trust loan programs or to apply for a trust or estate loan online, please visit this trust and estate loan page on our website.

You can register for the Orange County 2018 Holiday Social Here:
Register online at www.ocbar.org

Lending To A Home In A Trust – USC Trust And Estate Conference

USC Trust And Estate Conference

USC Trust And Estate Conference

Lending To A Home In A Trust In California

Please visit our table at the USC Gould School of Law 44th Annual Trust & Estate Conference on 11/16/2018. Mike Riggs & Tanis Alonso will be available to answer all of your questions on lending to a property held in a trust and how to preserve a property tax base on an inherited property in California. We will be hosting a table at the event from 7:AM to 3:PM and look forward to seeing your there. Exhibit hours are from 7:00 a.m. to 3:00 p.m. in the California Ballroom Foyer. The Ballroom Foyer is located on the 2nd floor. Exhibit tables are located in close proximity to the general sessions.

Loans To Trusts & Estate Properties

If you will not be able to attend the event, but have questions on loans to trusts and properties in a probate estate, please call us at 877-464-1066. We can assist you in understanding how you or a client can benefit from California Proposition 58 by transferring a parents low property tax rate to a child inheriting a home. Commercial Loan Corporation specializes in providing loans to property held in a trusts, including irrevocable trusts so that this can be accomplished. Our trust loans are Prop 58 compliant and allow for an equal distribution of the trust to be made using third party funds.

Click here for a link to use USC Gould School of Law Trust & Estate Flyer for details on how to attending and visit our booth on Loans to Trusts in California.

Loans To Trusts – Trust and Estate Conference.pdf

Lending To An Irrevocable Trust

Lender to Irrevocable Trusts in California

Loans to Irrevocable Trusts in California

Irrevocable Trust Loans

Commercial Loan Corporation is a California Private Money Lender that specializes in loans to irrevocable trusts. Due to the complexity and risks associated with lending to trusts, most lenders will not provide this type of finance. Loans to irrevocable trusts is our primary business focus.

If you are a trust administrator and require a trust loan to provide the cash needed for an equal trust distribution, please call us. Our specialized irrevocable trust loans can help provide the liquidity needed to allow for an equal distribution. Our loans can help a beneficiary who is inheriting real estate qualify for a California Prop 58 exclusion from property tax reassessment. Taking advantage of the Proposition 58 property tax reassessment exclusion can save potentially several thousands of dollars a year in property taxes.

If you are interested in receiving a loan for an irrevocable trust or have questions on the trust loan process, please call us at 877-464-1066. We can help you determine if a trust loan is right for your situation and if you may qualify for Proposition 58.

CALL US AT 877-464-1066 or Apply for a trust loan online here.

Trust & Estate Loan Benefit Calculator

Trust & Estate Loan Benefit Calculator

When you are considering keeping an inherited home from a parent and need to borrow money to buyout siblings or beneficiaries, it is important to make sure that it makes financial sense to do so. To assist you in doing so, we created the Commercial Loan Corporation Trust & Estate Loan Benefit Calculator.

Our trust and estate loan benefit calculator will help you quickly and easily determine if it makes sense to apply for a Proposition 58 exclusion from reassessment and take out a trust or estate loan. The loan benefit calculator compares your property tax savings to your estimated loan expenses and determines approximately how long it will take to recover those costs.  If you plan on keeping the home longer than it will take to recoup the fees, then the loan is of benefit; if not then it would make more sense to not conduct the loan.

So watch this short video on our Trust & Estate loan benefit calculator and then try the calculator yourself at https://cloanc.com/nprd-calculator/

For any additional assistance or to begin the Trust or Estate loan process, please call us at 877-464-1066.