PART FOUR: Irrevocable Trust Distribution Loans

Irrevocable Trust Distribution Loans

Stronger Family Security With Lower Property Taxes

As beneficiaries and heirs in California inherit family real estate, they are also inheriting property taxes. They generally transfer parents property taxes; taking advantage of property tax transfer – which attorneys often refer to as parent to child transfer or parent to child exclusion… thanks to Proposition 13; and Proposition 58 which also enables beneficiary buyout of sibling property shares.

Regrettably, siblings in California who are trying to keep property left to them by parents, frequently find themselves involved in emotional and financial conflict with co-beneficiaries who wish to sell their inherited property to an outside buyer.

Fortunately, many siblings looking to retain that type of emotionally based property for their family will often be able to buy out beneficiaries looking to sell their property shares with the help of a trust lender providing a loan to an irrevocable trust, typically referred to as a beneficiary buyout of sibling property shares. 

As many Californians know by now, a trust loan, working in concert with CA Proposition 58 tax relief, makes it possible for beneficiaries to sell shares of their inherited property, also called a “beneficiary buyout of sibling property shares”, which is typically just buying out a sibling’s share of an inherited house, maybe with an acre or two of land – or, as real estate lawyers refer to it, “the transfer of property between siblings” or “sibling to sibling property transfer” – by lending money to an irrevocable trust – typically from a seasoned California irrevocable trust loan lender, commonly called trust lenders, simply specializing in trust loans of all sizes.     

Property tax transfer benefits furnished by CA Proposition 58, provides a parental property transfer tax break typically called “parent to child transfer”… whereas CA Proposition 193 provides the same type of tax relief, only for grandparent to grandchild property tax transfer – while California Proposition 13 maintains their parents low property tax base, capped at 2% for beneficiaries, thankfully avoiding property tax reassessment at current tax rates basically forever, which adds up to significant numbers over the years and decades.

Beneficiaries, with these sort of inherited property conflicts, are usually motivated to save on property taxes, and generally enlist the help of a known trust lender in California that is experienced with loans to irrevocable trusts, plus utilizing California Proposition 13 and the Proposition 58 property transfer tax break. Exactly as the O’Neil family wished to do, as it happens with the help of a company called Commercial Loan Corporation.

If qualified, and over 55 years of age, many property owners involved in this exact process can also apply a significantly lower tax rate to a secondary dwelling, as long as they own the initial inherited property for 2 years or longer.

Rules, Regulations and Critical Steps for Irrevocable Trust Loans – in Concert with California Proposition 58 or Proposition 193:

1. Deciding who will keep the property
2. Determining final trust loan amount
3. Loan to trust/estate is executed
4. Trust lender equalizes cash distribution to beneficiaries
5. Property is transferred to acquiring beneficiaries name
6. Parent child exclusion is filed, avoiding property tax reassessment
7. Five to seven day trust funding turnaround is expected
8. The trust loan is repaid, finalizing a win-win family agreement
9. No Hidden Fees

An Alternative Lending Solution for Heirs and Beneficiaries

Both beneficiaries featured here, of the O’Neil family, discovered the Commercial Loan Corp with the help of their real estate attorney. They were both extremely motivated to get a $267,000 trust loan underway as quickly as possible.

The personal issue that appeared to motivate the initial call to the trust lender, besides saving money on property taxes, is the fact that both beneficiaries have wanted to keep this property in the family for a long time – to pass the property on to a daughter, enabling that daughter to keep the property as well. She wouldn’t be able to afford this property if the taxes went up, so it was essential that they reserved a low Proposition 13 driven property tax base.

Accepted assessed value of the inherited property was $400,000. Annual property tax savings was estimated to be $1,970. One beneficiary wanted to keep the property, with the other beneficiary looking to sell to an outside buyer, however both siblings appeared to get along well and basically agreed on all key points, of both minor and major importance – and after no time at all agreed to keep the property, as soon as Senior Account Executive Tanis Alonso from Commercial Loan Corporation explained the tax savings and the trust loan and Proposition 58 combined process to them, in simple easy-to-understand terms.

Both siblings agreed that their positive childhood memories were attached to the house they were inheriting, and this was important to retain, and maintain, for both siblings emotional and financial well being.

Bottom line, the cost of selling the property outright to an outside buyer would have been $24,000. Cost to the O’Brien family using the Commercial Loan Corp loan-to-trust process (i.e., not having to sell the property), while happily being able to keep their parents beloved  home forever, at a low yearly tax rate, which is only $10,602. Savings for the O’Brien siblings was a significant $13,398.

If you have questions about a loan to an irrevocable trust, you can reach Tanis Alonso at 877-464-1066.

PART ONE: Why is California the Only State Where Trust Loans Can Equal Low Property Taxes for Life?

TRUST LOANS

In every American state but one, in all 3,143 counties in America,  trust funds have the reputation for being a rich person’s tool for deferring and/or lessening taxes…  And that one state where trust beneficiaries have more options, are in fact actually able to receive or assign funds outside the “normal” distribution schedule, with trust loans for a buyout of sibling property shares, for example – is California and all its’ 58 counties.   

Despite the fact that beneficiaries of  trusts in California are totally blocked by a Spendthrift Clause that is written into most California trust funds, therefore are unable to get an inheritance cash advance assignment – they can, with the help of the California  Proposition 58 tax break, if they are inheriting real property from parents, inheriting parents property taxes capped at 2% thanks to CA Proposition 13 – get a large  trust loan to work with.

As most of us know, beneficiaries in California have the right to  buy out co-beneficiaries’ (typically siblings) shares in an inherited property through a loan to an irrevocable trust.  Siblings that, for example, refuse to retain an inherited property, and are inflexibly intent on selling to an outside buyer.  Moreover, the same access to additional distribution options like a trust loan, exist for business property owners as well… Which is why there has been so much push-back against the co-called  2020 “Proposition 13” business property tax being floated  out there for California property owners to vote on.  As you can guess, this is not a popular tax!

That is precisely why so many people love owning property, and residing in, the state of California. If you’re inheriting property in California from your parents, and it’s in trust, as we mentioned,  even if the ever-present Spendthrift Clause prevents you from obtaining a probate advance or inheritance cash advance assignment from a standard inheritance advance company – you can always set yourself up with a low tax rate for your inherited property… plus get cash from a trust loan within five to seven days generally.

Every other state in the union should, by all rights, have property tax breaks similar to Proposition 13 and Proposition 58, for parent to child transfer of property, or Proposition 193, for grandparent to grandchild property transfer

However, California is, sadly, the one lonely state where you can avoid property tax reassessment, capped at 2% with Prop 13… Plus keep parents property taxes and transfer parents property taxes, inheriting parents property taxes at super low base rates. With the ability to use Prop 58 property tax transfer, with, as real estate lawyers usually call it, “a parent to child exclusion”.  Why?  We imagine it’s simply a matter of lack of leadership to pave the way, and put pressure on local politicians, as Howard Jarvis did in the mid to late 1970s –  hitting paydirt with the CA Proposition 13 tax break in 1978! The history of which can be found here.

So the great thing about inheriting property in California is that you can not only buy out beneficiaries share of an inherited house – you can also keep that contested property from parents, with a trust loan, and wind up paying incredibly discounted property tax as long as you retain that property – plus apply the same tax break to a secondary property as well, if you’re in that position, and can afford to upkeep that home or property as well.  As discussed on business sites such as Commercial Loan Corpwith articles and interviews that dig into trust loan issues using Proposition 58 as a tax break solution

As you most likely already know, this makes it possible for a beneficiary to buyout  shares of inherited property from another sibling, or co-beneficiary – which lawyers call “a beneficiary buyout of sibling property shares” – or “buying out a sibling’s share of an inherited house” – or, as realtors refer to it, the “transfer of property between siblings” or “sibling to sibling property transfer”. Always through an irrevocable trust loan lender you feel comfortable with, that you know specializes in trust loans, various uses of trusts, estates, and inheritance assets.

And the catch is, that you always need a trust lender to help you determine and assemble all the complex requirements needed to get approved for the California Proposition 58 equal distribution process. The trouble is, it doesn’t happen by itself – something that many beneficiaries don’t fully understand, when they start out down the road with this process.

>> Click Here to Continue to Part Two…

PART FOUR: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

Corona Virus and Real Estate

In the final analysis, we must admit that the Coronavirus crisis is in fact the very last thing we needed in California – given the chronic problems with the job-based economy, and conflicts within various markets – the troubled agriculture business and the real estate market, just to begin with. 

Since 2016, we could clearly see a  downwards cyclical trend in California, revealing shrinking home sales.  And for whatever reason, we’re experiencing a peculiar growing trend, featuring  conflicts between siblings and other family members within estates and trust funds, typically with real estate.. with less and less cash each year that goes by. 

These conflicts between sibling beneficiaries typically revolve around inheriting real property, with one or more heirs and/or beneficiaries wanting to take more than their fair share of inheritance assets… Moreover, we see a lot of sibling conflict  revolving around the question of who will retain inherited property, or will beneficiaries looking to sell that property to an outside buyer win that battle of wills…. Taking the estate into an area involving parent to child exclusion, and transfer of property between siblings, or buying out a siblings’ share of a house, also known as buying out siblings’ property shares or sibling-to-sibling property transfer.

Interestingly enough, it is only in the state of California where you have property tax relief which actually looks like tax savings set up specifically to deal with economic problems brought about by the Pandemic – in every state… Put forth and passed by Lawmakers that actually care about the well being of the American people. 

CA Proposition 13 and Proposition 58 would actually be excellent tax break solutions for folks in every state right now, with a relentless Pandemic causing death and mayhem, both with our health, and with our job based economy.  This type of property tax savings for American home owners would be right on time – where you can keep parents property taxes, transfer parents property taxes, while inheriting property taxes at a low 1978 Proposition 13 base rate… Having the ability to use Proposition 58 property tax transfer benefits, with parent to child transfer or, as lawyers call it, “parent to child exclusion” – covered on trust lender Websites…   Property owners in every state should be learning more about these types of tax benefits, on official Websites such as the official California State Board of Equalization site; or at one of the free, well researched, well vetted niche California tax relief resource blogs like this site.  

It’s important to learn how trust loans work alongside reliable  Proposition 58 or Proposition 193 property transfer tax break benefits, making it possible to establish and retain a low Proposition 13 tax base with parent to child exclusion guaranteed; upon any  beneficiary buyout of sibling property shares, or as realtors call it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender with a solid, reliable reputation.

Learning about these tax breaks, and how they work with trust loans or without… will strengthen residential and commercial property owners’ ability to communicate  the right data points to their so-called representatives in Washington… with the hope that one of these days, sooner than later, we’ll start to see property tax relief being established in every state in this country, just as they have in the state of California. 

And yet  now with all the problems in the real estate market brought about by the Coronavirus Pandemic, with home sales on the wane as potential buyers cancel house viewings, or flat out decide against risking a large down payment and pricey monthly mortgage payment due to fears that they may lose their lucrative  white collar job in the very near future… Or that their investments in the stock market or in CDs may plummet any day soon.

With the Coronavirus crisis literally paralyzing the real estate market, and the retail as well as service industries in California; and elsewhere, doing exactly as it wishes to do with us essentially, as we continue to flounder.  With absentee leadership and misinformation costing thousands of fatalities, and an economic disaster getting more and more serious by the day. 

Looking at this issue realistically, we’re now talking about 45 million people filing for Unemployment. 2,415,000  jobs lost just in April 2020 alone as an example, and similar losses before and thereafter, as months go by and the virus deepens it’s effect on our way of life.  With tens of millions of people out of work.  We’re now talking about almost double the number of Americans unemployed during the Great Depression, which was over 25 million.  Let’s look at California, given the plunge of the real estate market due, to a large degree, to the Coronavirus crisis.  

California home sales fell to the lowest level since the last “Great Recession” as the housing market suffered the full impact of the Coronavirus Pandemic in May and sales remained below 300,000 for the second straight month, the California Association of Realtors informed us recently.   May 2020 home sales in California decreased 13.9% from 277,440 in April and down 41.4% from 12 months ago, when 407,330 homes were sold within that year. It was the second straight month that home sales dropped below 300,000 units. Additionally, the past year’s plunge was the largest drop in home sales since the Recession beginning in November 2007, contributing to a sales drop of 12.9%

It’s odd that experts are warning us that California could see a 20% increase in homelessness if this current economic downturn continues month after month. We may see as many, if not more,  evictions and foreclosures in California than we had during the last  “Great Recession”.   Not only that, with bread lines continuing to mushroom all across America; teeming with Americans in long lines of cars… apparently in their 6th or 10th or 12th week of unemployment, what would help residential and commercial property owners would be property tax relief similar to how it’s done in the great state of California. 

This is precisely the tax relief model that should be reviewed by Congress as a serious non partisan, non political Emergency Disaster Relief Measure… being that California the only state in America where you can still  avoid property tax reassessment at current rates; capped at 2% taxation, thanks to the original 1978 CA Proposition 13.

Websites that focus on California Proposition 58, on property tax transfer and on how trust loans from trust lenders work for estates   with property conflicts between siblings… equalizing distribution of cash, as real estate attorneys put it – so all beneficiaries walk away feeling they got what they wanted, and that it was win-win for all concerned.  This would give beneficiaries and home owners alike enough info on property tax transfer and parent to child exclusion, and property tax relief in general, to put their demands in writing to Congress…  and demand property tax relief as part of the Coronavirus Stimulus Package!  It would certainly make a great deal of sense right now, no question about it.

PART THREE: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

California Real Estate and the Coronavirus

With 50 million plus people having signed up for Unemployment in the USA,  that means  not working, and counting, thanks to the Coronavirus financial Tsunami sweeping across the United States, and most of the world, every single state in this country should have property tax transfer rights, to keep parents property taxes,  with their Proposition 13 protected property tax base.  In other words, maintaining the legal right to transfer parents property taxes to the property they inherit, whenever inheriting property taxes, regardless of the value of the property they receive.

Basically, in every state, we should have low tax base for home owners when inheriting a home and/or land from parents, from Proposition 13 tax breaks and Proposition 58 property transfer tax discounts, with Proposition 13 protected property tax base; always avoiding property tax reassessment.  This would help so many struggling middle class and working class Americans right now; during a Pandemic that unfortunately is going to be with us for some time.  Even if we get a vaccine soon.  

Were it not for Proposition 13 and Proposition 58 in California,  property taxes would be prohibiting many home owners from both retaining a home they have bought, as well as real property they may have inherited. 

With property taxes in 49 other states making life so difficult for so many home owners during normal times… when you examine the hardships property taxes are causing property owners throughout the United States during an economic depression caused by an out of control Pandemic… you have to come to the conclusion that something must be long-term.  All the more reason for genuine property tax relief to be installed immediately in states sinking deeper into recession, and even depression, month after month.  With no let up in sight.  

It’s not always about making more, its often about spending less.  And property taxes cut deeply into peoples’ savings every year when it comes time to pay those taxes.  With no payment plan allowed!  Especially during a Pandemic and ensuing economic crisis.  So you either come up with the cash, or lose your home!  And with so many home owners out of work during the Covid 19 crisis – and with so many more to come, surely  property tax relief would certainly be one solution to consider as a national disaster relief option for lawmakers  in Washington…. if they could be forced by massive public opinion to focus on long-term solutions.

And this issue of property tax relief touches so many situations and financial activities.  For example, in California it’s stunning to see how so many beneficiaries and heirs of trusts and estates opt for a loan to an irrevocable trust from a trust lender, so they can buyout property shares from other beneficiaries, usually siblings – saving a great deal of money on initial transfers of  property.  Plus retaining parents property taxes with Proposition 13 protected property tax base – allowing beneficiaries who do not wish to sell out, to keep a beloved home inherited from parents they love, which middle class beneficiaries typically, otherwise, could never afford to keep, due to tax hikes & property taxes reassessed at current rates. Thus saving tens of thousands of dollars in property tax breaks on inherited property from parents – basically forever. 

We don’t realistically expect passive Lawmakers or Senators  to consider this immediately, as they clearly aren’t giving the plight of their constituents much thought – however some could be working on this a little harder, with a little more imagination – swapping out all those cliches for a little more action!

Heirs in every state should be able to keep parents property taxes, transfer parents property taxes when inheriting property taxes from inherited property. And this includes any type of property tax transfer, as we’ve mentioned here already with parent to child transfer, or as lawyers call it, “parent to child exclusion”.   There should be a state tax break every American property owner has a right to, no matter what state he or she resides in. The public in the Midwest and down South should be thinking about that, and hammering away at their representatives in Washington, instead of obsessing on guns and political red herrings.

Home owners and beneficiaries in every state right now are suffering like everyone else… as bread lines accelerate  in many states, everywhere, especially in those Midwestern and Southern states.  In every state, property owners should be able to use a trust loan to resolve inherited property conflicts, just as they can in California between beneficiaries, working with CA Proposition 58 – enabling co-beneficiaries in every state in the union 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 realtors call it, “transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust from a trust lender… Just like in California.

Besides one short lived effort, and thank goodness for it, to help middle class and working class Americans to bridge the gap between personal disaster and paying a few bills – our national Congress must develop a more realistic, long-term initiative to help the country more than simply for a month or two, with $1200 or $2400.  No one is quite sure exactly what that entails…

However, we’re all sure about one thing.  This country needs something to help citizens move forward with less anxiety and fear… and it’s clear that lowering, and perhaps deferring, property taxes is one solution that, although it might not put new dollars in the pocket of Americans,  it certainly would help home owners and business or commercial property owners financially, lowering property taxes, through tax relief hopefully similar to the California  1978 Proposition 13 and 1986 Proposition 58 property tax relief measures.  These are perfect models to mirror,  in every state and county throughout the United States of America.

>> Click Here to Continue, for Part Four…