PART ONE: Trust Loan Distribution and Equalizing Solution

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.

 

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