PART TWO: Are Trusts, Trust Loans and California Property Tax Breaks Strictly for the Rich?

Loans to Trusts

Loans to Trusts

CA Proposition 58, Loans to Trusts and Property Tax Breaks

Beneficiaries in every state in America should have property tax measures like California does, and be able to use trust loans & Proposition 58 to equalize property shares sold by co-beneficiaries;  and by all rights be able to transfer parents property taxes, when inheriting property taxes in California, to themselves at the low rate their respective parents used to pay, whenever inheriting property taxes in California on gifted or inherited property — either residential or business real estate.  In all states, and especially in high tax states like New York,  Texas, Massachusetts and Pennsylvania. 

If people want to march on something, egregious property tax rates in most of this country would be worth marching for.  Trust loans & Proposition 58 in California, and by now institutionalized California tax breaks from Proposition 13, saves beneficiaries a great deal of money; avoiding property tax reassessment on the transfer costs,  plus the low base rate from parents, from CA Proposition 13.

Lawmakers in every state can, and should, pass property tax relief bills that make sense, like CA Proposition 58 and 193, enabling low raxes on property tax transfer from parents and grandparents when inheriting a home, for example… as well as maintaining a low Proposition 13 tax base from parents, forever.  California trust loans are used to resolve inherited property conflicts, between beneficiaries, working alongside CA Proposition 58 – enabling co-beneficiaries to sell shares of inherited property, a beneficiary buyout of sibling property shares… while avoiding property tax reassessment. Generally buying out a sibling’s share of an inherited house – as real estate lawyers call it, “transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust – from a lender specializing in trust loans and CA Proposition 58, from A to Z.

And likewise, inheriting property taxes on that home in accordance with parent to child transfer or parent to child exclusion, from present day property tax rates, avoiding property tax reassessment simply to keep property taxes low, giving beneficiaries the ability to utilize trusts for personal estate use and benefit – for all Americans; not just for the VIPs and the wealthy.  California is the model every American state should mirror when it comes to property tax relief.

If this were in fact the case, all Americans, in every state, would be able to enjoy a bit more of a sense of genuine financial comfort, with a greater sense of security, that most people associate with their home…  Placing this sense of “home security” under threat year after year, by jarring home owners and business property owners’ feeling of security, where their home is concerned, with unexpected, seemingly arbitrary property tax hikes on what is most Middle Class people feel is their most valuable asset, and the very foundation of what little security  Middle Class Americans have these days. 

Middle Class Americans as a rule do not have a seven-figure bank account or eight-figure net-worth “portfolio” that helps them sleep better at night!  In fact, a recent 2019-20 financial report tells us that most Middle Class Americans have trouble coming up with $400 in cash to deal with a personal emergency!  Bearing in mind that unreasonable taxes on their home – what they consider their base asset for personal security, along with their health and income – might intrude on their security at any time – unless controlled by iron clad property tax relief, such as the 1978 CA Proposition 13 tax break, and the 1986 CA Proposition 58 property transfer tax measure

This automatically made  unpredictable, arbitrary tax hikes, imposed by politicians with questionable motives and goals, impossible to impose on all Californians.  Property tax relief is not just a dream, as many critics in other states might suggest.  California accomplished it. Why not every other state as well?

If you are seriously considering a loan to a trust in California, to take advantage of California Proposition 58,  our Senior Editors would advise you, without hesitation, to look into Commercial Loan Corp at 1-877-464-1066 in Newport Beach, CA. This firm is one of the only California lenders that not only specializes in assisting beneficiaries with Proposition 58 – unlike conventional lenders, they are also able to lend directly to an Irrevocable Trust with loans of any size and, unlike other lenders, surprisingly, they treat all their clients like V.I.P accounts –  regardless of the size of their loan, or property value.

 

PART ONE: Trust Loan Distribution and Equalizing Solution

Trust Loan Distribution and Equalization

Trust Loan Distribution and Equalization

Improving Your Family’s Yearly Financial Security With Lower Property Taxes…

When families inheriting property are experiencing conflicts between beneficiaries who wish to retain their inherited property and siblings who want to sell their property shares – a loan to a irrevocable trust is frequently the answer.

Many property owners can also be qualified to apply and keep a significantly lower tax rate on a secondary dwelling as well; if they are 55+ and retaining the initial inherited property for 2 years or longer.

Steps, rules & regs for the trust loan process – in conjunction with California Proposition 58 – are typically as follows:

1. Determination of who will keep the property
2. Determination of the loan amount
3. Loan to trust/estate is implemented
4. Trust lender equalizes cash distribution to beneficiary or beneficiaries
5. Property is transferred into the acquiring beneficiaries name
6. Parent child exclusion is filed, avoiding property tax reassessment
7. Five to seven day funding turnaround
8. The trust loan is repaid, concluding a win-win family arrangement
9. No Up-Front Costs
10. No Hidden Fees

An Alternative Financial Solution for Beneficiaries:

As an example of this alternative financial solution for beneficiaries, we’ll take a look at the Anderson family in Newport Beach, CA; who found themselves in exactly this type of situation recently.  Siblings Don and Marie Anderson decided to seek help from Proposition 58, plus a trust loan, from a well known, nearby trust lender; whose motto impressed them – Commercial Loan Corporation, whose motto states: “Regardless of trust loan amount – all clients receive VIP treatment, and become a permanent member of the Commercial Loan Corp family!”

The Anderson‘s decided they would allow Marie to keep the inherited home from their late mom, as long as her brother Don could receive enough cash with a trust loan from a reliable trust lender, for his shares in the inherited property… making  the transfer of property between siblings possible.  Therefore, selling to a third party buyer would not be necessary – a process otherwise known as beneficiary buyouts of sibling property shares. At the same time maintaining property tax transfer from parents or, in other words, inheriting property taxes that simply transfer parents property taxes that retain the low property tax base their parents paid… due mainly to tax benefits made possible by California Proposition 13, parent to child transfer or, as attorneys call it, parent to child exclusion

A secondary conflict revolved around the value of the house, which was in dispute. A figure was finally agreed to of $1,400,000. This end result was finally resolved by both siblings agreeing to a value based on taking the middle number of the two property value projections. The Anderson’s trust loan was $958,000; and property taxes under Commercial Loan Corp’s trust loan management were assessed at only $1,687.50 – whereas estimated property tax at Current Value (1.1%) was $15,400. Estimated Annual Tax Savings was $6,857.

Both siblings were motivated to keep the low (2% maximum) property tax base that was paid in the past by their parents, thanks to property tax relief provided by the 1978 California Proposition 13 property tax measure.  Both Don and Marie were receptive, however each had their own attorneys, and Don, who was looking to sell, would only talk to the trust lender through his attorney, who was quite experienced with beneficiary buyouts of sibling property shares.  Both siblings fortunately agreed to the trust loan process in general, with Commercial Loan Corp., but disagreed on precisely what assessed value to apply to the property.

At one point, Don insisted he would sell to an outside buyer if his sister would not agree to the assessed value of the property that he favored.  It was finally decided that a Cost Benefit Analysis was required to insure it would be worthwhile to even keep the property. Subsequently, the positive outcome of that analysis resulted in a mutual agreement that it would be worthwhile to keep the home.

Additionally, there was property tax savings of $6,857, while Marie was able to keep this wonderful family property without any issues; with all her cherished family home memories perfectly intact.

Bottom line, it would have cost $84,000 in closing fees, attorney  charges, and so forth – to sell this inherited property outright. Cost to keep the property, with a trust loan covering all costs and fees, was only $23,255. Moreover, the trust received an additional $60,745 more, than if they were to sell the property to an outside buyer.

Obviously, this financial choice the Anderson’s made, with respect to choosing a trust lender and opting for a trust loan plus help from Proposition 58, turned out to be the right decision for this family.

 

PART ONE: Are Trusts, Trust Loans and California Property Tax Breaks Strictly for the Rich?

California Loans to Trusts

California Loans to TCA rusts

CA Proposition 58, Loans to Trusts and Property Tax Breaks

Gifting property to adult children is a wonderful thing to do, setting aside any potential tax breaks for a moment… although property tax relief does obviously make it all the more wonderful for parents and offspring. And, thankfully, to take advantage of these benefits in all 58 California counties, you don’t always need to be wealthy, with $1,200 per hour tax attorneys standing by to manage your ability to avoid property tax reassessment, or to learn how to use a trust to save on taxes or to buy out siblings’ shares in your inherited real estate… with a trust loan.

Naturally, it doesn’t hurt to live in a state like California, where you get to save tens of thousands of dollars over the years in unique property tax breaks, tax breaks that compared to other states…. or compared to California the way it was pre-1978, before Proposition 13 came about, and later in 1986 when Proposition 58 became a reality, when Californians became able to keep parents property taxes upon inheriting property from parents, with the ability to transfer parents property taxes, inheriting property taxes that are as low as they can possibly get on a property tax transfer, with a simple parent to child transfer, or, as lawyers call it, a “parent to child exclusion”.

Another related point that seasoned California trust lenders, real estate attorneys, and realtors know quite well, is the fact that large loans to irrevocable trusts are not simply for the extremely well off. These are trust loans in California for wealthy and middle class beneficiaries alike… loans to irrevocable trusts, to buy out siblings’ share of inherited property, with sibling to sibling property transfer when selling shares of inherited property. 

This provides beneficiaries who insist on selling inherited property with secure, fair transfer of property between siblings; with enough cash to equal, in fact generally to surpass, their share in that property; this process allows the beneficiary or beneficiaries who do not wish to sell out, the absolute  right to retain the inherited property in question – plus receive a low yearly property tax rate at levels unimaginable to most property owners and beneficiaries in other states.

Quite simply, all business and residential property owners in America, nationwide, should pay no more than the 2% maximum property tax rate property owners pay ever year in California in property tax rates, plus low rates on property transfer, thanks to California Proposition 13 and Proposition 58, generally in concert with a trust loan that pays for expensive closing and legal costs.

 

 

PART FOUR: Interview With Michael Wyatt, Real Estate Tax Advisory Firm

California Property Tax Advice

California Property Tax Advice

California Property Tax Advice and Consultation

Our conversation with CEO Michael Wyatt of Michael Wyatt Consulting, a Real Property & Property Tax Advisory firm based in Corona, CA – continues…

Property Tax Transfer:  And what about your clients, Mr. Wyatt?  Do they understand and go along freely with your plan, avoiding property tax reassessment with Proposition 13, and property tax transfer, with the right to transfer parents property taxes, and other benefits from Proposition 58… the whole nine yards?

Michael Wyatt:  Most of my clients own real estate….  To inherit a house from their parents, my clients would have to pay reassessed taxes on their own home and the inherited property from their parents.  Most people understand that with Proposition 13 they (A) save their inherited home, and (B) get a significant tax break on their primary residence…  Without these tax breaks most middle class people,  and elderly folks living on a fixed, generally modest  income – would, in most cases, be forced to sell their inherited property.

Property Tax Transfer:  With so many positive factors generated by Proposition 13 and Proposition 58 – why would anyone go against these tax breaks that positively impact the middle class, the upper classes, blue collar folks – you name it!  Who are all those people over-using the media to endlessly whine about  Prop 13 adversely affecting ownership of real estate in California;  causing shrinkage of the real estate market.  They appear to be endlessly  pushing back against property tax breaks that are so incredibly popular, so beloved by all Californians… that even renters seem to get the fact that keeping landlords’ property taxes low also keeps their rent low…

Michael Wyatt:  Politicians with special interests clearly want to destroy Proposition 13, and ultimately Proposition 58 and 193 – for their political interests, claiming under-funding and over-spending    supposedly brought about by property tax breaks.

Property Tax Transfer: Sir, what in fact is actually causing all that under-funding and over-spending? Folks would like to know this!

Michael Wyatt: In fact, what is actually causing these under-funding issues is lavish over-spending on overly generous local government pension plans and salary increases; funding local and state raises and bonuses… over-spending on overly robust health coverage plans, vacation benefits, and retirement-pension plans.  As well as over-spending on special interest projects and massive special interest public works, don’t forget that! 

Property Tax Transfer:  And killing the California real estate market…  Is there any validity to this at all?

Michael Wyatt:  None.

Property Tax Transfer:  Any truth to all that verbiage about Prop 13, and home owners’ ability to transfer parents property taxes, adversely affecting ownership of real estate in California…?

Michael Wyatt:  Zero.

Property Tax Transfer:  (Laughter) Zero!

Michael Wyatt:  Zero! Proposition 13 is not adversely affecting ownership of real estate… Not killing the real estate market in California.  It helps the  real estate market, not hurts it!  Did those opponents and critics of Prop 13 ever hear about the building of new homes and condos in Los Angeles… in the Bay area… in a thousand other locations in California?  There is no truth to that argument whatsoever.  Zero truth to that position.

Property Tax Transfer: Zero truth… That’s incredible.

Michael Wyatt:  Zero!!

Property Tax Transfer: Thank you sir, for a terrific interview. And eye opening analysis of real property inheritance, Prop 13, Prop 58 –  trust lenders; and the art of trust loans throughout the state of California.

Michael Wyatt:  Thank you, sir.  It’s been a pleasure.


Looking at a few cases the Michael Wyatt Consulting Firm has worked recently, gives us a clear overall idea of how the Proposition 13 low property tax base and Proposition 58 property tax transfer and trust loans profoundly affect both home owners and business owners in the state of California – such as:

The Los Angeles County Power Center case, which reduced the Tax Assessor’s value by nearly $22 million, resulting in $232,000 in total refunds. The firm’s Orange County Self-Storage Facility case reduced over $18 million in Assessor’s value, resulting in $185,500 in total refunds. The firm’s work for a Los Angeles movie theater reduced the local Tax Assessor’s assessment by over $12 Million, resulting in a total refund of over $129,000.

The firm’s Orange County Retail Center case lowered the local Assessor’s valuation by $11 Million – generating over $113,000 in total refunds. Just a few examples, like these, show us the enormous potential beneficiaries inheriting California property from parents actually have, in terms of saving  a great deal of money every year in property taxes, due to Prop 13 – as well as the stable  Proposition 58 driven ability to equalize cash payments to co-beneficiaries during real property buyouts, with trust loans. Plus many other lesser known but meaningful benefits. 

When beneficiaries have an opportunity to avoid property tax reassessment, while inheriting property taxes during property tax transfer – typically as middle class or upper middle class California based residential and commercial or industrial property owners – and one has the ability keep parents property taxes – one can transfer parents property taxes over to inherited property; which features parent to child transfer, commonly known as parent to child exclusion. Hence, one retains parents (Proposition 58) or grandparents (Proposition 193) low tax base during property tax transfer… basically forever.

The fact that our property taxes then remain at the low California  Proposition 13 tax base that our parents had generally makes a significant difference to our life.  Financial stress from unpredictable, and often unaffordable, tax rates are lifted off our back.  Tax rates that would be in the tens of thousands of dollars every year, were it not for CA Proposition 13 tax relief, and Proposition 58 property tax  transfer benefits.   

For assistance with California property tax issues or to take advantage of California Proposition 58, Michael Wyatt can be contacted at (951) 264-6152. You can reach the Commercial Loan Corporation at (877) 464-1066; or simply go to https://cloanc.com with questions on a loan to a trust, irrevocable trust, or a property in probate plus numerous other related issues.

PART THREE: Interview With Michael Wyatt California Property Tax Consulting

California Property Tax Consulting

California Property Tax Consulting

Our conversation with CEO Michael Wyatt of the Michael Wyatt Consulting firm, Real Property & Property Tax Advisory, based in Corona, CA continues…

Property Tax Transfer:  Mr. Wyatt, how do you see the inner dynamics of your average real estate conflicted estate, or trust? Meaning, the conflict between those who are determined to keep their inherited property, and those who prefer to sell…

Michael Wyatt: When your parents die, and your trust agreement says “equal shares”…. That means equal shares.  People basically just get the overall concept of getting money from a trust loan even if it doesn’t sell. If you’re going to hold a property for more than 7 years, it makes more sense, and it’s more money in your hand…  It makes more sense all around to get a trust loan; and everyone gets more money.  For short term it may not be more beneficial to not sell. 

Property Tax Transfer:  From your experience, do more people prefer to sell inherited property?  Or do they lean towards keeping property they inherit from their parents?

Michael Wyatt:  Judging from the beneficiaries that come to us, more beneficiaries end up not wanting to sell their inherited property.  And if they did want to sell, a lot of people can be easily convinced, with cash from a trust loan equalizing things for them. 

Property Tax Transfer: Aside from fast, inexpensive trust loan cash, how is it that so many beneficiaries are  easily convinced?  Relatively, anyway.

Michael Wyatt: You have to look at it this way: there are always  one or two, minimum, who  insist on selling their shares in an inherited property. And there is our initial client contact, with those who want to sell.  And that is where these family estate or trust conflicts begin.  When mom and dad die proceeds are in effect, since inheritance is not subject to capital gains tax.  But people who do plan on selling an inherited property come to see very quickly that they are going to be hit hard by capital gains tax. If they sell their property, capital gains tax always hits them. 

Property Tax Transfer: And so that, in fact, is a very strong convincing factor.                                     

Michael Wyatt: Correct. 

Property Tax Transfer:  And property tax relief in general… How did this come about in California, whereas there is nothing quite like this anywhere else in the USA?  

Michael Wyatt: Well, we have Oregon, and they’re close, with a maximum property tax rate of 3%…  which is close to California’s Proposition 13 cap of 2%.  But, right – you’re correct, that’s about it in the United States for serious,  meaningful property tax relief.  

Property Tax Transfer: So how did this type of property tax break  actually start, and evolve into such a strongly supported property tax system, with rock solid rights to parent to child transfer, or rather parent to child exclusion… consistently avoiding property tax reassessment, and so on?   

Michael Wyatt: These property tax benefits from Proposition 13 came about in California because people didn’t want property tax increases of 25% or 30%, or whatever.  It really was out of control.  And property tax rates were particularly high and unpredictable and unstable in California, for whatever reason, prior to 1978 when Prop 13 passed. So, as you know, property appreciates let’s say on average 20% per year. For the sake of argument, let’s say 20%.  But property tax values are only going up by 3%… People know intuitively that they can’t rely on the Assessors evaluation.  Property value goes up 10% or more let’s say, as opposed to assessed value going up by 2%. That’s a significant difference. 

Property Tax Transfer: Was property taxation in California so bad before 1978 that something like Proposition 13 property tax relief, parent to child transfer rights, was simply inevitable? 

Michael Wyatt: Was California really that bad before 1978, when Proposition 13 tax relief went into affect?  Yes. California was raising taxes more than any other state, before 1978. Most seniors – before Prop 13 – were reassessed at present-day rates. And many, many were forced out of their home. They simply could not afford the property tax hikes descending on them.  Period.  People, especially older people, were being impacted with higher property taxes year after year.  And in many cases – with catastrophic results, obviously.

>> Click Here for Part Four, to Continue Interview…