Transferring A Parent’s Property Tax Rate & Prop 58 Loans

Transferring A Parent's Property Tax Rate & Prop 58 Loans

Transferring A Parent’s Property Tax Rate & Prop 58 Loans

This “parent to child exemption” has saved so many  beneficiaries, homeowners and commercial property owners, thousands  of dollars;  making it possible to put a few dollars away in the bank every year, with the ability to avoid property tax assessment… and transfer parents property taxes at a reasonably low base rate — having the right to keep parents property taxes at the low tax base they were accustomed to paying; i.e., inheriting property taxes that remain low.

Otherwise — very few middle class homeowners could afford to keep an inherited home. They’d have to sell out, given that most of these estate heirs or trust beneficiaries have their own home to maintain and pay taxes on! Or, beneficiaries can still go to a blog or Website that is deeply focused on Proposition 58 and Proposition 13, trust loans and estate property tax reduction like, for example  Property Tax Transfer Trusts.

Or you can conduct research on some other sites focused on Prop 58 and unique, consistently  effective uses of intra-family trusts as  trust loans, generally to buyout property shares owned by co-beneficiaries of the same estate or trust — along with locking in a low property tax base by avoiding CA property tax reassessment at current, typically  high market values, such as https://cloanc.com/tag/california-prop-58

Exactly why many of us think other states, particularly expensive  states, should be looking into property tax relief for all property tax transfer scenarios, involving property tax breaks like the parent to child transfer of inherited property, similar to tax breaks avoiding CA property tax reassessment at current market value. 

Realistic examples of high-tax states that desperately need property tax relief are, for example, states like Massachusetts, or New York, Texas, or Pennsylvania… States like this should all have a property tax exclusion or exemption to protect middle class homeowners  from property tax evaluation at current market rates… giving residential and commercial property owners the right to avoid property tax reassessment every year.  Establishing lower property taxes for all property owners, including landlords; which would  affect  apt. building and commercial store rentals all across any major state… thereby impacting the finances of middle class residents and commercial property owners in an extremely positive fashion.

The surprising reality in California is the fact that so many homeowners do not understand property tax transfer, nor do they understand the use of trust loans and trust lenders, when inheriting a property you want to keep, and need a trust loan to pay off beneficiaries who had insisted on selling their shares in the inherited property, to equalize cash for them in the process, so they don’t need to sell, often below fair value, to a third party.

People that do not understand any of this need to do a little research, on info blogs like this one; or on Websites that delve into Proposition 58, and how property tax transfers and trust loans work, such as the  Trust and Estate Loans Website… or at one of the transaction oriented sites like Commercial Loan Corp  This gives nervous  beneficiaries a great deal of accurate information to help them avoid estate conflicts with co-beneficiaries… typically siblings.  So for once, the inheritance and estate process becomes a win-win experience for all concerned! If you need assistance with a Trust or Estate Loan, you can reach Commercial Loan Corporation at 877-464-1066. They can assist you with the process and answer any questions you might have on the topic of Parent to Child Exclusion from Reassessment and transferring the property taxes from a parent to a child when a trust is involved. 

The Trust Loan Proposition 58 Process – Interview with Account Rep Abe Ordaz, Rising Star at Commercial Loan Corp.

California Proposition 58 Parent to Child Property Tax Transfer Trust Loan Specialist

California Proposition 58 Parent to Child Property Tax Transfer Trust Loan Specialist

On Oct. 2nd, 2020, Property Tax Transfer Trusts sat down with Account Representative Abe Ordaz from Commercial Loan Corp, in Newport Beach, California; to discuss his routine with trust and estate attorneys, trust administrator and beneficiaries, explaining the trust loan / Proposition 58 funding process…

Property Tax Transfer:  Abe, thank you so much for sitting down with me today to chat about your work at Commercial Loan Corp and how you assist clients when it comes to using California Proposition 58 to transfer a parents low property tax base to a child who is inheriting a home.

Abraham Ordaz: Sure, my pleasure.

Property Tax Transfer:  Abe, who do you generally speak to when it comes to taking calls from prospects?

Abraham Ordaz: I speak to a variety of involved parties when it comes to helping a client transfer a parents low Prop 13 property tax base from a parent to a child. Often times the conversation begins with a Trust Administrator or a Trust Beneficiary who is interested in using Prop 58 to transfer a property tax base from a parent to a child on an inherited property. After that initial conversation it is common for me to also have a conversation with the Trust & Estate Attorney who is assisting them with the distribution of the trust or estate.

On occasion beneficiaries do not have an attorney who is currently working with them and I am able to refer them to one in their area who is familiar with the Proposition 58 Parent to Child Property Tax Transfer process and who can help them secure their property tax transfer benefit. At Commercial Loan Corporation we have helped hundreds of clients by providing them with a loan to an irrevocable trust so that an equal distribution can be made and they can meet the requirements set by the California Board of Equalization to qualify for the Proposition 58 property tax transfer benefit.

Property Tax Transfer: Are your clients and attorneys usually familiar with trust loans, and how they work with the California Proposition 58 process?

Abraham Ordaz: Many of the Attorneys that I work with are familiar with the Proposition 58 process, as well as Proposition 13 and the need for a trust loan to equalize a distribution when a trust or estate does not have sufficient liquid assets. In fact, many of my clients are referred to me by their trust and estate Attorney.

We are one of the only California Trust and Estate Lenders who will lend directly to an Irrevocable Trust with no personal guarantee from the acquiring beneficiary and we are the only California lender that I am aware of that specializes in these types of transactions, specifically to help our clients secure every single Proposition 58 property tax benefit.

That’s the reason I get so many Attorney referrals.  Attorneys want to make sure their clients are in good hands, when it comes to something this important – and that the process is done 100% correctly so that the client will qualify for the Proposition 58 parent to child exclusion, or the parent to child exemption, from property tax reassessment.  Attorneys are well aware that we typically help clients save more than $6,000 per year in property taxes on an inherited home.  Without exception, that’s the bottom line critical issue for them!

Property Tax Transfer: Abe, that is fantastic that you have developed such great relationships with Trust & Estate Attorneys.  Do you usually provide them with an estimate on how much you would be able to save their clients when it comes to property taxes?

Abraham Ordaz: Yes, we provide a free cost benefit analysis for each client. It tells them exactly how much we expect their client to save in property taxes each year as opposed to if their property were to be reassessed. At that time we also provide them with a free quote for the trust loan so that we can make sure it is in their best interest. In most cases it is of great benefit and we generally save our clients over $6,000 per year in property taxes by helping them keep a parents low Prop 13 property tax base.

Property Tax Transfer:  That’s significant. Do you get into the various particulars with Proposition 58, and  how that works in concert with loans to trusts?

Abraham Ordaz: Yes, we break everything down into very simple terms so that the Proposition 58 property tax transfer and trust loan process are all easy to understand. That is one of the reasons why so many Trust and Estate Attorneys who deal with California Proposition 58 love to work with us. 

Property Tax Transfer:  Got it. Abe, how do you help your clients who are interested in keeping a parents low property tax base on an inherited home understand how the trust loan and Proposition 58 parent to child transfer benefits work, keeping the initial inheritance property transfer taxes down, buying out siblings’ property ownership shares, and so on?  Yet keeping it very simple.

Abraham Ordaz: I start with the basics of Proposition 58 and the California Board of Equalization requirements for a Parent to Child Property Tax Transfer. I then help them determine how much their trust or estate will need in order to make an equal distribution. After that we review all the numbers together and I answer any questions they may have on the process. Next we get their Attorney involved so that they can handle all of the legal aspects of the Proposition 58 parent to child exclusion and provide us with all of the required information for the trust or estate.

Lastly, we provide them with the funds needed so that an equal distribution can be made in order for them to meet that qualification requirement for Prop 58. The Attorney or Property Tax Consultant then helps them submit their property tax transfer request to the County Assessors office so that they can secure their parents low property tax base.  

Property Tax Transfer:  At the end of the day it’s really just all about saving money on property taxes for clients, isn’t it. It’s a complex process, but the motivations remains very simple, doesn’t it?

Abraham Ordaz: Yes, bottom line, it’s a simple matter for these clients and lawyers.  It’s all about how we can help clients save money on property taxes to keep their family home. I help explain all this clearly to the heirs that want to keep their inherited property. 

Property Tax Transfer: Yes I see.  Abe, how do you explain why the trust is so crucial to this entire process?

Abraham Ordaz: Typically when attorneys ask about the trust loan process – I tell them our loan goes directly to the trust… and follows the property.  Conventional lenders want to take to take the property out of the trust – but once the property is taken out of the trust, this often triggers a reassessment…  So if you took a cash loan from a traditional bank for example – you’d end up putting the property in the beneficiary’s name and thus get reassessed at current property value. Which in most cases raises the property tax rate significantly. If  the property was purchased say 20 years ago, the property tax would be significantly higher today. 

Property Tax Transfer:  Got it.  Abe, do you get into the customer service aspect at all?  I understand that a very special kind of customer service is critical to this process, to be successful, so to speak, with each family.  

Abraham Ordaz: Yes… Customer service is the most important aspect to our business and we try to be our best version of ourselves for every client regardless of the size of the loan. Everyone is treated equally and respectfully.  Everyone that joins the Commercial Loan Corp family, as it were, is a V.I.P. client!

Property Tax Transfer: That’s very interesting and a rare thing to find these days in this business climate. Well, we want to thank you so much for sitting and chatting with us today.  We really appreciate it.

Abraham OrdazIt’s my pleasure. Thanks for having me.

A New Threat Arises ~ Critics of Property Tax Relief Look to Unravel CA Proposition 58 with (2020) Prop 19

Vote No Proposition 19

Vote No Proposition 19

A Threat to Proposition 58, Parent to Child Exclusion, Arises

If they were keeping both eyes open, most property owners in California were looking, tentatively, for signs on the horizon of any new threat to the popular property tax break known as the “parent to child exemption, or “Prop 58 parent to child exclusion”… Meaning, exclusion from having your home, or any other property, reassessed every year at current property tax rates.  Being that this exclusion is the the main foundation  that property tax relief in California is built on, if you were serious about dismantling property tax relief in this state, it would be likely that you’d go after this critical tax break in earnest.

So naturally, at the last moment, when everyone thought they might have  “dodged the bullet” in terms of efforts to dismantle Proposition 13 or Proposition 58 one more time, relentless critics of California Proposition 13 and Proposition 58 decided to add one more measure to the mix, to remove the parent to child exclusion allowed under Proposition 58, from California home owners… A measure they are calling Proposition 19.  Very short sighted! 

These measures also kill off our right, in conjunction with Proposition 58, to get a loan to an irrevocable trust and keep a low property tax base forever, from parent to child transfer, also called parent to child exclusion or parent to child exemption… with the ability to transfer  property between siblings or buyout siblings’ share of inherited property.  Proposition 15 kills off landlords’ tax breaks and so have fun watching your rent go sky high, landlords will have no choice to stay in business!  In fact everything will go up in price, all goods and services as we have said many times. 

Proposition 19 kills the exemption we just mentioned, the CA Proposition 13 protected parent to child transfer… in other words transfer of property between family members… No more ability to transfer parents property taxes (in other words, their low tax rate becomes your own low tax rate). Inheriting property taxes will be no more, and you’ll be spending over $6,000 more every year in property taxes.  No joke.  You won’t be able to keep parents property taxes any more, property tax transfer will be no more… no more ability to avoid property tax reassessment.  That’s the killer.                          

No longer being able to avoid property tax reassessment would be a truly devastating event for home owners who depend on extra spendable cash freed up by the money they save from the lack of property tax reassessment.  Losing the parent to child exclusion, in an already hyper-expensive state, would devastate millions of Californians.  Not to mention the possibility of the so-called Split-Roll or “Proposition 15” commercial property tax, which would certainly add to the devastation by raising industrial and commercial property taxes, including apt. building landlords, forcing landlords to raise rents on residential and business tenants…

Or we could talk about trust beneficiaries or estate heirs losing their ability to get  a loan for hundreds of thousands of dollars to an irrevocable trust to buyout siblings who are intent on selling their share of a beloved inherited home, along with establishing a low property tax base made possible by Proposition 13, working in tandem with Proposition 58.  And the list goes on. 

Without being partisan or subjective – it’s fairly clear to any reasonable person that would herald in grave economic disturbance, and even disaster, for the entire state, where middle class  and working class people are concerned.   Obviously, many residents in Malibu or  Beverly Hills or Santa Barbara would not be feeling the pinch.  However, we’re not talking about the 1%.   

This brainchild of C.A.R. and the CA Legislature is, if you step back and think about it, not only brazen but also short-sighted, as they are actually looking  to fund special interests with revenue from property taxes — right smack in the middle of a Pandemic.  With over 6.7 million Californians having signed up for unemployment checks, these critics of property tax relief want to remove these universally popular property tax breaks protected by  Proposition 13 and Proposition 58.  Benefits that middle class and working class California families have become  accustomed to, and depend on. 

Proposition 58 Particulars

Most Californians are familiar with Proposition 58 and the Prop 58 parent to child exclusion. As you know, California Proposition 58 serves to protect folks who owe $8,500 or more in additional property taxes, while they settle their affairs. Prop 58 also allows beneficiaries who wish to keep inherited property in their family to buyout co-beneficiaries’ property shares, through a trust loan, and helps those looking to keep their inherited home also keep a low Proposition 13 protected property tax base their parents paid. And everyone goes away happy, win-win, all the way around.

In 1986, to protect families from massive property tax hikes, voters passed Proposition 58, revising the California constitution to ensure transfers of property between parents and children could be executed with the right to avoid property tax reassessment. Under Proposition 58 property of any value, plus additional property with up to a million dollars of assessed value, can be transferred between parents and children without reassessment.

However, the chief sponsor of ACA-11 (Proposition 19) the California Association of Realtors (C.A.R.) came along and decided to spoil all these critical win-win protections. C.A.R. assembled enough signatures to get their initiative on the ballot. Apparently, C.A.R. is motivated by their monetary interest in drumming up new home sales, regardless of the fact that the measure creates a multi-billion-dollar tax increase statewide, will throw the entire middle class California economy into chaos, already in turmoil due to the Covid-19 health and unemployment crisis…

The 2020 Proposition 19 would look to repeal the 1986 Proposition 58 parent to child transfer (property tax break) and impose reassessment of inherited or transferred property within families. The one exception being if the property was used as the principal residence of the beneficiary to whom it was transferred, and that exclusion is even capped.

Unintended or Intended Consequences?

The Legislative Analyst’s Office (LAO) estimated that the repeal of the “inter-generational transfer protections” guaranteed by the Prop 58 parent to child exclusion, and Proposition 193 grandparent to grandchild exemption would, if passed, cause somewhere between 40,000 to 60,000 families in California to be crippled economically by higher yearly property taxes.

Obviously, most middle class families would be forced to immediately sell an inherited home left to them by a surviving parent. Thus, a serious imposition has been placed on the “right to choose” for countless middle class families… simply so realtors can sell a few more homes on the market.  The trade off does seem to be rather uneven.  If Proposition 19 passes, all those beneficiaries in California will be expected to move in to their parent’s home and make it their primary residence within one year of their surviving parent’s death. 

The basis for this measure is unrealistic on its’ face, for a number of reasons… Many beneficiaries are already home owners, and pay out a fair amount of cash every month already to maintain their own mortgage and/or property upkeep. Moreover, if a beneficiary has a large family, and his or her parent’s home is not spacious enough – what alternatives are left for these folks?

If Mom or Dad’s home is situated a long distance away from a beneficiary’s place of work, and/or the spouse’s workplace – and perhaps inconveniently far away from their children’s school, adding possibly an additional 60 or 90 minutes on the freeway each way, back and forth every day… What options will these families have to look to? 

Critics of property tax relief in California are proposing somewhat unrealistic measures that, although they may look good on paper from a financial perspective,  they fail to incorporate realistic issues and scenarios that exist for regular people with regular lives. 

So vote your conscience in November.  We suggest you vote “No to Proposition 19”.

Information and Trust Loan Funding

For more details on the C.A.R. originated Proposition 19 effort to turn back the clock on property tax relief in California, you can go to CaliforniaProposition58.org

For more information on trust loans working in concert with Proposition 58, go to Commercial Loan Corp   Or to apply for a trust loan and speak to an account representative, go to “Apply for a Trust Loan”…  Simply to read up on Prop 13 and Prop 58 parent to child exclusion, as well as on critics of property tax relief in California,  plus the Covid-19 effect on real estate throughout the state – please go to the article: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

PART THREE: Trusts, Intra-Family Loans & Property Tax Benefits in California

California Property Tax Benefits

California Property Tax Benefits

If you’re looking for a simple probate estate or trust fund cash advance assignment, we suggest looking at the Inheritance Funding company or the Heir Cash Now firm.  On the other hand, of you are looking for an  intra-family loan to an irrevocable trust to nail down long-term low property tax base rate as well as making an inherited sibling property buyout possible, we suggest taking a look at some trust lenders like Commercial Loan Corporation.

They all  have good reviews on Yelp and Google; and the Commercial Loan outfit surprisingly appears to be one of the only California lenders that specializes in assisting Estates, Trust Administrators and Beneficiaries with Proposition 58 equalization loans to achieve a parent to child property tax transfer, achieving a low Proposition 13 tax base, as well as assisting beneficiaries with buying out sibling co-beneficiaries. 

With a firm like this, you can hit the ground running, with 7-day funding, $400,000, $800,000, $1,500,000 – whatever funding you need… with super easy to qualify terms and low rates. Use Prop 58 to buyout sibling property shares along with locking in a low Prop 13 property tax base – this particular firm and their unique trust loan process.  

Like many people  who go down the traditional bank or credit union route to get a loan,  you’re probably tired of all those declines and instead decide to go for a loan to a trust, where your credit is not the be-all-end-all of the matter, nor is your income and financial history.

As long as you’re inheriting real property in the state of California, and you qualify for California Proposition 58 property tax benefits, you should be able to take advantage of the parent to child transfer property tax benefits and completely avoiding property tax reassessment!  You should be able to transfer parents property taxes, when you’re inheriting property taxes connected to the property you’re inheriting from your parents.

It would be wise to do some reading on the subject at an official govt. site, such as https://assessor.saccounty.net/ExemptionExclusion/Pages/ExclusionsMoreInfo.aspx  or at the Website of the premier trust loan firm we mentioned here – that has actually become one of the most popular companies of its’ kind in California, the Commercial Loan Corporation, whose President, Mr. Kerry Smith just about wrote the book on how Proposition 58 and loans to trusts help secure a parents low property tax base on an inherited home.
 
This is precisely how both young and older property owners, residential and commercial property owners… and beneficiaries of all types, get adequately familiar with process issues such as the ability to transfer parents property taxes, when inheriting parents property and inheriting property taxes imposed on those properties; plus the right to keep parents property tax base on an inherited home, under the right circumstances involving property tax transfers of all types, in the light of parent to child transfer or, as your attorney  might refer to it “parent to child exclusion”.

This sort of non traditional financing is still viewed as extraordinary, being that California is still the only state in the union that provides consistent, authentic property tax relief like this.  It’s become fairly obvious that every state in America should have similar property tax relief measures in place for residential and commercial property owners… Especially (and we have stated this previously) as unemployment is impacting tens of millions of Americans, as a direct result of the country still struggling in the midst of an extremely serious Pandemic.

Even though there are “trust fund cash advance” or “probate cash advance” assignments to consider as a financing source, from a standard  inheritance funding company — if one is dealing with buyout issues and looking to lock in a low base forever, in conjunction with the CA  Proposition 58 property tax break, beneficiaries are getting more “bang for the buck” if they use Prop 58 to buyout sibling, or co-beneficiary, property shares; using a trust loan from a niche trust lender, while insuring a low Proposition 13 property tax base.

At the risk of being “non-objective” we advise you to call a firm with a  fast turnaround, low rates, and easy terms…You might start by calling a firm that actually provides all those benefits, such as Commercial Loan Corp, at (877) 464-1066.

PART TWO: Trusts, Intra-Family Loans & Property Tax Benefits in California

Beneficiary Loans California Proposition 58

Beneficiary Loans California Proposition 58

Beneficiary Trust Loans in Concert with California Proposition 58

The use of trusts  and trust loans by trust attorneys and real estate professionals, other than the process that is  popular in the state of  California, where Prop 58 enables inherited property buyouts —  we see a different yet similarly unique trust loan process described in summary by financial magazine Barrons in the following way: “With interest rates at historic lows—for the time being—wealthy families are turbocharging their estate-planning strategies by pairing intra-family loans with trusts.”  It’s a great concept; a great outcome to save on property taxes.  And it’s nice to see estates paired with trusts and intra-family loans welcomed into the higher-end oxygen at Barrons. There’s just one problem. Only for “wealthy families”.  There is the catch.

It’s not the same as financial visionary Kerry Smith’s brilliant tweak to the trust funding process, at Commercial Loan Corp in California;  with the final outcome showing us that California Prop 58 enables inherited property buyouts plus a low Proposition 13 property tax base for ever.  Mr. Smith’s visionary trust loans are not simply for the wealthy.  This top of the line trust financing process enables inherited property buyouts, largely for middle class beneficiaries, as well as upper middle class heirs, plus wealthy property owners looking to save a great deal of money on property taxes.  No one likes to give the Government their precious cash, that was hard to make, and easy to lose.

As property tax specialist  Michael Wyatt once said, “The Government had plenty of money – they don’t need our property tax cash to survive!”   ge along with locking down a low Proposition 13 driven property tax base, capped at 2% max – and most importantly… for all home owners.  For all beneficiaries, for middle class families, for working class families, and for rich folks… Not just for the wealthy – as the lenders featured in Barrons view the trust loan process – only for folks in the 7 or 8 figure class.

So, clearly… States other than California obviously have their own way of tweaking the trust financing process… both wealthy and middle class families are taking advantage of these unique tweaks, not just  families that are well off, as gossip and rumors have it.

Therefore, you now have trusts paired with intra-family loans and beneficiary loans, with a view towards different ways to tweak the trust loan process, in order to help conflicted beneficiaries of estates and trusts. So – When you get to property tax relief in the state of California,   the unique pairing of trusts and  loans, or probate estates and loans, with Proposition 58 – throws an entirely new spotlight of results  out there for trust beneficiaries and heirs of estates… 

The ability to avoid property tax reassessment and lock in low parents property tax base forever for permanent property tax relief,  for any property transfer, always with low property tax benefits enabled by the use of Proposition 13… working in concert with Proposition 58, enabling inherited property buyouts and lower property transfer tax hits. Always avoiding property tax reassessment – making sure you transfer parents property taxes, even when inheriting business facilities, inheriting property taxes for commercial properties, at  the same low Proposition 13 property tax base your parents enjoyed.

California trust loans are used to resolve numerous inherited property conflicts, between beneficiaries, working alongside CA Proposition 58 – enabling co-beneficiaries to purchase  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, usually with some land – as realtors call it, “a transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust – from a reliable trust lender… specializing in trust loans, CA Prop 13, and Proposition 58.   That combination of skills and know-how you can’t find just anywhere, even in California.

So you add CA  Proposition 58 and an experienced California trust lender – plus a low Proposition 13 property tax base for beneficiaries, and residential or commercial property owners – while using trust loans with Proposition 58 in various new ways… This has decidedly become an unquestioned, mainstream financing process; referred by bank officers, accountants, property tax specialists and tax attorneys.  Whereas, prior to 1986, one wouldn’t be able to find this type of trust or estate financing anywhere! 

Think about this… even surfacing in a buttoned-up mainstream publication like Barrons, covering the pairing of trusts and trust loans – they reiterate, “Many wealthy families with taxable estates can benefit from cleverly structured trusts and intra-family loans…”  Establishing the fact that non-conventional uses of trusts and loans is an established process in mainstream financial services – if you’re in the 1% bracket!  Nice concept, with agreeable lenders, helping folks to save on property taxes… for rich clientele only. 

However, if you reside in California, and you’re a middle class beneficiary or new home owner, or moderately well off commercial property owner, you can find a more fair minded, well rounded niche lender who will serve your financial needs if you’re not rich, for example like the Inheritance Funding Co. in San Francisco, CA, if your estate is in probate and you need fast cash from a future inheritance, and you don’t even have to be upper middle class, and certainly not wealthy as you do with the firms and trust loan process Barrons favors…

Or if you’re inheriting real property and need a trust loan to buyout siblings and retain a low Prop 13 property tax base that your parents had, then you want something like the Commercial Loan Corporation,  in Newport Beach, CA.  You can forget pairing a trust with a loan and beneficiaries for wealthy families only!  You don’t need those folks.  You can get your estate or trust financial needs met elsewhere!

>> Click Here to go to Part Three…

PART ONE: Trusts, Intra-Family Loans & Property Tax Benefits in California

California Proposition 58

California Proposition 58

Many beneficiaries in California who are inheriting property, and seriously considering trust loans with Proposition 58 to nail down a low California Proposition 13 property tax base… working in conjunction with Prop 58 (property transfer from parents) or Proposition 193 (property transfer from grand parents)  insures an iron clad property transfer tax shelter. Naturally, this provides a solution to a conflict that many estate heirs and trust beneficiaries often run into… with respect to buying out sibling beneficiary property shares, while locking in a low property tax base rate forever.  

This may not sound like much to some folks, but in fact it frequently makes the difference between being able to keep an inherited property, or losing it to the tax man or in a foreclosure due to yearly property taxes that aren’t able to avoid property tax reassessment, and consequently are much too high for a typical middle class property owner to maintain.

Trust loans are used by numerous beneficiaries of trusts, and probate estate heirs, who wish to buyout a co-beneficiary’s interest in a trust-owned home, business property, or land, where certain beneficiary siblings have decided to retain their inherited real property – while other siblings firmly stand their ground, preferring to sell their shares in an inherited property to an outside party.  A trust loan often provides a worthwhile solution to this type of family conflict, so one beneficiary, or several, can buyout other beneficiaries that are looking to sell.  

What is so interesting and unique about this type of estate or trust financing is the fact that the entire process is so different than the usual inheritance funding process, involving trust advances and probate loans. Best to side-step the “wealthy families only” firms, and to run with a trust lender that has a reputation for treating all clients as VIP customers, welcomed into a family-like atmosphere, regardless of the size of their loan.  Like the cloanc.com outfit in Newport Beach.  Naturally, a company like that is quick to secure a loan against real estate owned by the trust, which is a logical first-step, and tends to set clients’ minds at rest, letting everyone know that the process is proceeding forward in a common-sense, professional manner.  

This is completely different than the usual inheritance funding process, which uses the entire estate, real property plus cash and investment estate or trust assets, to supply heirs with an inheritance cash  advance “assignment”, rather than an actual “loan”.  Trust loans that work in conjunction with Proposition 58 serve a very different purpose, and a trustee must approve the trust loan of course, and sign off on the deal.

Beneficiaries and property owners should typically do their own solid  research on this process; on business oriented websites that are easy to understand,  such as Proposition 58 and Prop 13 focused site that offers a professional atmosphere, and provides clear, easy to digest information in an accurate, no-nonsense way… or a free resource site that covers a wide range of property tax relief issues; or even in articles on sites that can be trusted for accuracy, for example at Barrons, in an article like:  “How Family Loans and Trusts Can Create Big Wins”…  Focusing on: “…interest rates at historic lows — for the time being — wealthy families are turbocharging their estate-planning strategies by pairing intra-family loans with trusts… As long as interest rates stay low, many families with taxable estates can similarly benefit from cleverly structured trusts and intra-family loans…”  

A different use of trust loans, as we can see —  yet still a step away from conventional loans; bringing a trust and loan funding into the family mix… With trust loans and Proposition 58 moving the process into an entirely new arena, without the necessity of the involved  family being wealthy, should you be a well-off or middle class property owner or a new  beneficiary in the state of California.

In Tune with Tough Times in California – Free Prop 58 Trust Loan Evaluation – Save Over $6,000 in Property Taxes

Status

Prop 58 Trust Loan

Prop 58 Trust Loan

California is unique when it comes to utilizing trusts and trust loans, along with taking advantage of incomparable property tax relief measures from as Proposition 13, and exceptional property tax breaks from Proposition 58 (i.e., parental property transfer) and Proposition 193 (i.e., property transfer from grandparents). 

So if you reside in California, are inheriting property there, and want to insure you keep your parent’s low Proposition 13 tax base, along with buying out siblings who insist on selling to an outside buyer – you can go to a niche trust lender who will lend directly to an irrevocable trust for you, to accomplish all of the above.

Commercial Loan Corporation in Newport Beach, CA appears to be everyone’s favorite trust lender, as they specialize in taking full advantage of Proposition 58 & 193 property tax benefits, avoiding property tax reassessment,  making sure you transfer parents property taxes correctly, when inheriting a business facility, home and/or land; abruptly inheriting property taxes that must remain low if you wish to maintain your favored lifestyle!  

You certainly want to work with a lender that has a great deal of experience making sure that beneficiaries and property owners nail down the right to keep parents property taxes, with a low Proposition 13 tax base… for all property tax transfer scenarios, including parent to child transfer, what your attorney probably refers to as “parent to child exclusion”… In other words, exclusion from current property tax reassessment rates. And that typically adds up to saving over $6,000 every year in savings on property taxes. 

The process sounds complicated, but it really just boils down to having a lending firm you can rely on to provide enough liquidity to equalize everything between beneficiaries – providing enough cash to buyout siblings who insist on selling your inherited property; while enabling you to keep that property at a low Proposition 13 tax base.  At the end of the day, it should always be a win-win scenario for everyone involved.

Beneficiaries especially like Commercial Loan Corp’s same-day approval & 7-day funding turnaround – with no hidden fees, a simple application form and flexible underwriting. 

By taking advantage of the Proposition 58 and Prop 193 exclusion;  in tandem with a trust loan, if you happen to be a sibling keeping inherited  property – you get to retain that property and at the same time get to keep parents property taxes, which ends up being a low Proposition 13 base, capped at a 2% maximum rate.  You also get to buyout siblings who insist on selling the inherited home and/or land in question; and ultimately walk off with more money than if they had sold their property shares to an outside buyer.  So what frequently begins as sibling conflict, ends with a win-win resolution for all concerned.  

In many cases, a trust loan is necessary, as otherwise the California State Board of Equalization sees this transaction as a sibling buying out another sibling, or child of the parent. Instead of a parent to child transfer, or parent to child exclusion. The exclusion from present day property tax rate reassessment simply calls for a transfer of property from parent to child.

So the trust loan acts as the bridge, so to speak. You can refer to it  any number of different ways, such as “buying my brother’s share of our house” or “buying out my sister’s property shares”… Or you can call it a transfer of property between siblings, a buy out of siblings share of house, buying out siblings’ property shares, or a sibling to sibling property transfer.  It amounts to the same thing. 

Moreover, regardless of the size of  the trust loan, everyone involved is treated like a V.I.P. client, with first-class cordiality.  Which is the main reason we like to refer this firm.  

You can call Commercial Loan Corporation for a free Proposition 58 Trust Loan Evaluation at 877-464-1066 or visit their website at: https://cloanc.com/

 

CA Proposition 58 & the Trust Loan Process: An Interview With Trust Loan Specialist Ken McNabb

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Loans to Irrevocable Trusts in California

Loans to Irrevocable Trusts in California

Kenneth McNabb is an Account Representative at the Commercial Loan Corporation in Newport Beach, California. We began the interview by asking Ken to address a central issue in this field, namely communicating a rather complex process in very simple terms:

Property Tax Transfer: Hello Ken, how do you disseminate the information you want to get across to prospects and new clients? In order to address financial issues that beneficiaries need to know, to resolve what are often complex financial concerns?

Kenneth McNabb:  I tend to give general information at first, to give potential clients a solid overview… And try to determine exactly how urgent the the financial issues are, that are driving the folks I’m talking to.

Property Tax Transfer: What do you do with a family that appears to be at an impasse, for example cannot agree on the value of an inherited home?

Kenneth McNabb:  When no one in a group of siblings can agree on what the value of a home should be I typically suggest we create a Cost Benefit Analysis and have an appraisal conducted. Plus I make sure I know who wants to sell an inherited property, and who wants to keep the property… and nail down their low Proposition 13 tax base. Everyone wants that low property tax base to be intact forever, of course. Most people do not realize that they can actually save a considerable amount of money by taking out a trust loan to keep a home as opposed to having to pay realtor fees, closing costs and repair costs involved with selling a home.  In fact we save our clients on average more than $40,000.00 when compared to selling a home. That does not include the annual tax savings of over $6,200 by taking advantage of California Proposition 58!


Property Tax Transfer: When in the estate or inheritance timeline do these siblings tend to contact you, contact the firm you work for?

Kenneth McNabb: Some are urgent to get the money right away to buyout siblings…. Some even call us before anyone even passes away! Sometimes it’s a week after the death of a parent… Sometimes it’s a year after someone passes away.

Property Tax Transfer: What is the most important thing in an estate situation like that, that comes to you all mixed up and in conflict?

Kenneth McNabb: The most important thing is the loss of a parent. That’s number one. But also, they all generally agree right at the beginning that they all want to lock down a loan to a trust, to buyout a sibling… to keep an inherited property, and most importantly to make sure they nail down that low Proposition 13 tax base their parents had. Those items are always in the picture as important, even critical, elements. 

Property Tax Transfer: And the next most important thing?

Kenneth McNabb: Well, I suppose that would be – what it means to inherit property from a parent. As maybe a once-in-a-lifetime, singular event.

Property Tax Transfer: Yes, it’s definitely a profound event. Tell me, who do you primarily deal with in your average family group? Typically.

Kenneth McNabb: Not counting the exceptions… Typically, I’m generally dealing with “the captain of the team”. The trust administrator, the person who wants to retain the parents home or oldest sibling. On occasion one of the siblings in an attorney and I will deal with them.

Property Tax Transfer: What does that person, that spokesperson, typically want, most of all?

Kenneth McNabb: I’d have to say that they want to keep the low CA Proposition 13 property tax base. Plus be able to buyout the sibling or siblings who want to sell their shares in that property.

Property Tax Transfer: What about Proposition 58, getting approved, and how it all works in conjunction with a trust loan, besides securing a low CA Proposition 13 property tax base… How do you explain all that? As I see it, this is the key to success in this business. If they don’t “get it” the first time around, they usually just walk away, don’t they? People often push away what they think they can’t understand.

Kenneth McNabb: My job is to make sure they understand this process within the first 30 seconds of the conversation! As usual, I keep everything as simple as possible. I explain Proposition 58 and securing a low CA Proposition 13 property tax base in very, very simple terms… Letting them know, in plain English, without a lot of confusing technical jargon, how an exclusion functions for the property – from parent to child… I always ask them, in simple language, “Would you rather pay property taxes based on the day their parents’ bought the property… Or get hit with a super high current tax base, and pay what would be reassessed now, today…” I suppose you can guess what their choice generally is!

Property Tax Transfer: Right. Doesn’t take a genius to figure that one out!  Everyone wants that low CA Proposition 13 property tax base. Now, although you’re dealing with more or less non-conventional lending issues… How do you deal with non-conventional loan requirements? Where approval is concerned – along the pathway towards final approval for these folks.

Kenneth McNabb: Since we are lending to the trust and not to an individual in most situations, the loan process is very fast and easy.  In fact, we can often close a loan in as little as a week; providing we have received all of the required paperwork. 

Property Tax Transfer: What is the Continuing Legal Education all about? Is that for Trust & Estate attorneys only?

Kenneth McNabb: Commercial Loan Corporation specializes in loans to trusts to help our clients utilize Proposition 58 to keep a parents low Prop 13 property tax base. After doing this for so long, we have become very knowledgeable on California Proposition 58 matters. We partnered with Michael Wyatt, a California Property Tax Consultant that worked in a California Assessors office for over 15 years. Together, we created an authorized Continuing Legal Education course that Attorney’s may take to meet their California continuing legal education requirements.

Property Tax Transfer: Thank you for taking the time to speak with us Ken. If one of our readers needs assistance with California Proposition 58 or has questions about a loan to an irrevocable trust, how may they reach you?

Kenneth McNabb: They can either call us at 877-464-1066 or inquire right on our website.  We are always happy to answer any questions that they are their Attorney may have on the trust or estate loan process.  We can also provide a Free benefit analysis which shows how much each beneficiary will save by using a trust loan to keep a home as opposed to selling it. 

 

PART SEVEN: Coronavirus Crisis in California Motivating Certain Politicians to Push Harder for New Proposition 15 “Split-Roll” Property Tax

Property Taxes During the Pandemic

Property Taxes During the Pandemic

So let’s wrap this discussion up with a brief recap… and summary.  It  is completely obvious to any reasonable person that even though the new, proposed Proposition 15 commercial & industrial property tax on landlords and business property owners is not aimed at consumers per se – at the end of the day, it is consumers who will pay for this new property tax; paying significantly higher prices for normal everyday goods and services. 

Consumers that have for some time already been struggling with the high cost of living in the state of California… as have residents in, for example, other states at the top of the list of “most expensive states” list…  most expensive American states – such as Hawaii, New York, Washington DC, and Oregon.  States that are this costly to live in do not, and we should repeat do not, need property tax hikes, especially at a time like this when state economies are literally crumbling under the weight of a Coronavirus Pandemic, a tsunami of unemployment, now surpassing 51 million jobless claims nationwide and over 13 million looming evictions; plus a host of other related problematic issues. 

These costs, in California, encompass some of the steepest taxes in the country, including some of the highest gas, income, and sales taxes. In fact, the California Legislature just passed policies that have resulted in residents paying 48% more for electricity than the rest of the nation.  Fact, not opinion.

Adding a new property tax on top of these existing costs will only exacerbate the affordability issue for many Californians. The downside (ironically, there is no upside) of the Proposition 15 business property & industrial facility property tax that Secretary of State Padilla and other powerful political critics of property tax relief in California are not looking at.

We suggest they had better remember we are in the throes of a national Pandemic, with California running particularly high infection rates, and they would do well to start looking at a potentially massive downswing of middle class and working class personal income descent if landlords, business and commercial property owners   abruptly lose their ability to use Proposition 13 to avoid property tax reassessment. At the same time, if business properties have been passed down through family members, countless businesses will be impacted in this fashion, losing their ability to keep parents property taxes and parent to child exclusion in California, when  taking advantage of Proposition 13 and Proposition 58, working through a loan to an irrevocable trust… a Prop 58 transfer of property. 

The great fear is that the next step politicians who oppose Proposition 13 and Prop 58 will take, after opening the door to unraveling property tax relief for businesses, will be to go after property owners’  ability to take advantage of property tax transfer, or the transfer of parents property taxes upon inheriting property taxes in general.  The anxiety running through the state concerns fear that critics of 1978 Proposition 13 now pushing a property tax measure called Proposition 15 (formerly entitled Proposition 13 “Split-Roll” tax) will feel free to go after the right to avoid property tax reassessment, or parent to child transfer and parent to child exclusion in California, if Proposition 15 actually passes in November, 2020.         

Obviously, this will impact all Californians, raising rents, throwing prices of goods and services throughout the state completely off the map of normalcy.  If these folks do not begin looking at this issue more realistically, they are going to step into a deep statewide quagmire of economic quicksand, if this property tax passes in November.

Although politicians on the state level claim that their revised version of the true Proposition 13 property tax relief system, they’re calling “The Split-Roll  Proposition 15” property tax, includes a “small business exemption” that will supposedly fix everything. Don’t believe it.  We suggest you don’t drink the Cool-Aid!  This new property tax on commercial property owners in California will be crippling, to most  businesses and commercial entities, including landlords, in California.  The revised measure supposedly expands the “reassessment exemption” to small business owners with property valued at $3 million or less, up from the initial $2 million threshold.  Sounds like double-talk to most of us. 

One of “us” being the talented, courageous Rob Gutierrez, President of California Taxpayers Association. Mr. Gutierrez says that these supposed “protections” for small businesses aren’t even close to being strong enough to allow these folks to survive – with thousands of jobs for Californians not able to survive in the bargain! More people on the Unemployment Line.

“Because so many small businesses rent as opposed to own their commercial space… higher property taxes on the buildings they rent space in will of course result in more expensive rent for them”, says Mr. Gutierrez… “What that translates into is higher prices for consumers and brick-and-mortar stores. Dry cleaners, grocers, companies that cannot move, will have to find a way to pass these costs on.”

And as usual, who does this get passed on to? That’s right. Us. The consumers.

Faced with higher property taxes, commercial property owners with leases will assuredly be motivated to pass these increased costs on to their tenants.  They’ll have no choice.  For example, the owners of shopping centers or strip-malls, with numerous commercial tenants, if unable to avoid property tax reassessment or parent to child exclusion in California, will without question be compelled to increase rents on their commercial and industrial tenants. Next step, prices on goods and services go up literally overnight.  

So we can only further assume that adding a new property tax to the already heavy burden carried by residents of this great state will only serve to make current economic challenges only more challenging   for regular middle class Californians.  There’s no doubt about it.  Hence the need for California to keep the property tax system as is… Leaving the status quo alone. 

PART FIVE: Coronavirus Crisis in California Motivating State Politicians to Push Unpopular “Split-Roll” Property Tax

Property Taxes In California

Property Taxes In California

As we get close to wrapping up this six part report on the devastating affect the Coronavirus crisis has  had on the California economy, and the housing market throughout the state, let’s clarify one thing – not all the news is negative.  There are positives, or upsides, in view.

California, unlike most other states in America, still provides citizens with property tax relief benefits from Proposition 13 and Proposition  58 with loans to trusts (or loans to irrevocable trusts), the legal right to transfer parents property taxes when inheriting property and inheriting property taxes.

With Proposition 13 and Proposition 58, California gives beneficiaries and property owners the ability to keep parents property taxes no matter how low the base rate is — upon property tax transfer…. with parent to child transfer or, as estate lawyers refer to it, “parent to child exclusion”.  No other state gives citizens property tax breaks anywhere near this type of property tax relief.  So no matter how challenging things get as a result of the current health crisis, Californians can always turn to these property tax benefits for positive options when dealing with inheritance assets such as real property, trust loans, sibling property buyouts and related matters.

Aside from that, there are a series of objective, updated conclusions and assumptions that the California Association of Realtors has recently provided; that they want residential and commercial as well as industrial property owners, and beneficiaries, to be aware of:  

(a) Mortgage rates are expected to remain low, or even go lower, as Coronavirus outbreaks continue nationally, as well as in California.   Therefore, economists anticipate that this will most likely help lower the cost of borrowing money and this is expected to make housing more affordable over the short term, which, if this projection is accurate, will help mitigate some of the uncertainty and negative impact on housing demands in California.

(b) Potential home buyers might be discouraged by increasing uncertainty and fear of oncoming recession. However mortgage rates recently fell to an all-time low of 3.13%. Down from 3.80% at the beginning of the year, representing cost savings over the life of a 30-year loan. These anticipated short-term economic risks are genuine,  however they may be offset by the long-term benefits of lower rates for individual borrowers.

(c) Economic volatility in California may lower demand for luxury housing, as overall household wealth declines; however this volatility may also create unique opportunities for luxury home buyers. With less luxury buyers in the market, there could be opportunities for price discounts for buyers who remain in the high-end market.

(d) Demand from foreign home buyers could be vastly reduced. As domestic buyers generally finance homes in much larger proportions to their foreign counterparts, low rates could be stimulating more domestic demand in California – offsetting the negative impact that typically goes hand-in-hand with foreign buyer demand.

(e) Much of California’s Building Industry materials are purchased from Asian countries such as Japan and China or Malasia. As the Coronavirus crisis disrupts these supply chains, the cost of these materials may increase over the short-term and become limited, thereby increasing cost of construction and reducing the pace of already tightening residential development in 2020 – 2021.

(f) Improved affordability may emerge from lower rates plus fewer new homes being constructed – as the material supply chain is impacted. This may lead to an upward pressure on home prices in California. Unsold inventory is already at low levels, so reduced construction means that is likely to continue – especially if buyers respond to lower rates.

(g) The situation in California remains fluid, and conditions could deteriorate beyond the current severity of the virus outbreak. Yet if   current economic forecasts of modest declines in GDP growth are realized, the effects of lower rates should help offset the effects of a slow economy with increased economic uncertainty so  California could still experience improved home sales and prices this year.

It’s clear that the Coronavirus is having, and will continue to have, a material impact on the California economy, and in particular the housing market through 2020 on into 2021… However, it is also safe to say that this is not necessarily the right time to panic.

The effect of lower rates will help to offset some of these movements in the housing market, and forecasts of economic growth by the California Association of Realtors and other organizations have been revised in a  downward direction, but only by tens of basis points – not hundreds.

The situation in California remains fluid; therefore C.A.R. along with attentive and realistic economists at the Public Policy Institute of California or Howard Jarvis Taxpayers Association, and other responsible organizations, will certainly be closely monitoring all of these property matters and financial issues… and will be providing all of us with accurate data, as updated information continues to develop and surface.   

>> Click Here: To Continue to Part Six…