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.


Blog Feed: Property Tax Transfer & Trust Loans – Transferring Property Taxes While Avoiding Property Tax Reassessment


Property Tax Transfer

California Property Tax Transfer

There are, as we all know, numerous reasons that California property owners support Proposition 13 and California Proposition 58.  Proposition 13, passed by voters on June 6, 1978 protects individual consumer and corporate owners of residential and commercial real property from current property tax reassessment, with the exception of completion of new property construction and/or a change in property ownership.  Proposition 58  was approved as a California constitutional amendment by voters on November 6, 1986 – to exclude transfers of real property between parents and children from property tax reassessment.  Moreover, CA trust loans keep parents property taxes low, insuring that an even distribution can be made.

Generally, this gives adult offspring the ability to keep parents property taxes – in other words, to retain a parent’s lower Proposition 13 protected property tax rate. This frequently results in families saving literally thousands of dollars every calendar year. Moreover, these activities open up opportunities for  companies like the Commercial Loan Corporation to help  California beneficiaries and heirs who are middle class, not particularly wealthy, to qualify for Proposition 58 property tax benefits, by providing bridge loans to trusts and probate estates in order for an even distribution to be made for these heirs and beneficiaries. This is precisely how trust loans keep parents property taxes low in California.

Since 1978, Proposition 13 has saved California taxpayers over $528 billion – which has saved every taxpayer in California more than $60,000.  The 1978 Proposition 13 tax shelter finally provided residential and commercial property owners in California with tax relief that has proven, year after year and decade after decade, to be reliable, predictable and secure.

California home owners and renters all enthusiastically support Proposition 13, being able to reliably avoid  property tax reassessment at current tax levels; as well as Proposition 58, with respect to parent to child transfer of property, and parent to child exclusion from property reassessment…  and Proposition 193, involving grandparent to grandchild property transfers, when inheriting property taxes – which has collectively enabled families to comfortably transfer real property from parent to child, and keep parents property taxes, without being reassessed with constant  property tax increases.

Renters in California support Proposition 13, due to the fact that most residential and business renters are aware that as long as their landlord’s property taxes remain low, their rent is likely  not to go up.  Whereas if landlords’ taxes in California go up – we can predict with mathematical certainly that business  rents will follow.  Landlords will more or less have no choice but to increase their tenants’ rents.

Naturally, this would affect stores, gas stations, offices, industrial facilities, and so on – and that would ultimately affect the cost of food, of business goods and services; of gas;  so forth and so on.  Everything would go up.  And consumers would be hit hard.   Which is basically why renters in California support Prop 13, even if they’re not property owners themselves. In fact — why mostly everyone in California with a sense of community and fairness wholeheartedly supports California Proposition 13, 58 and 193.