Trust Loans Creating a Low CA Property Tax Base for Heirs

Trust loans in California – typically irrevocable trusts – are usually taken advantage of by sibling beneficiaries, with the invaluable help of a reliable trust & estate lender, to find a method of dividing inherited shares of real property held within a trust instrument…

Meanwhile, one or more beneficiaries interested in retaining sole ownership of their inherited property with a low CA property tax base, generally use a trust like this, in conjunction with Proposition 19, to buyout siblings looking to sell their inherited property shares, who get more cash than if they were to sell out through a realtor.

Financing an Estate Buyout Through a Trust Lender

A trust loan is generally viewed as the safest and easiest way to make equalized cash available to each beneficiary selling off their inherited property shares… providing them each with an equal share of the overall total worth of a home being bought out by a beneficiary or beneficiaries looking to retain sole ownership of inherited property… Unfortunately, credit unions and banks are not willing to lend to a trust to help a family in need of funding. However, a trust & estate lender invariably is.

This particular trust financing solution allows a beneficiary to keep a beloved family home, while co-beneficiaries looking to sell off their inherited property shares take their fair share of buyout cash plus an extra $14,000 or $15,000 by not selling through a realtor, given the standard 6% realtor commission and other ancillary fees and charges imposed on sellers in California. It gets expensive!

Embracing an intra-family buyout solution – Proposition 19 and an irrevocable trust loan – beneficiaries selling their inherited property shares end up walking away with that extra cash in their pocket… while the beneficiary or beneficiaries buying out their siblings happily receive their parents low Proposition 13 property tax base; as well as the opportunity to retain sole ownership of their parent’s home. This means everything to some folks – not only for the sake of important family memories, but also for the benefits found in owning a family home that could never be duplicated at anywhere near the original price the parents paid for it two or possibly three generations ago… 

Inheriting a Low Property Tax Base

The unique benefit of inheriting your parents’ low property tax base, unique to California – minimizing property tax  reassessment –   could never be duplicated except for the tax relief provided by Proposition 13, and the Proposition 19 parent-to-child exclusion.

Proposition 13 locks in a base-year value to a home whenever it originally changed ownership, and limits the annual property tax cap to 2% until ownership changes again – or until the realtor community manages to pass another property tax hike.  Which is why time is ripe to become better acquainted with the parent to child property tax transfer, and its’ crucial, subsequent parent-child exclusion from reassessment… As well as new access for homeowners to CA State Board of Equalization & Property Taxpayers’ Bill of Rights.

These are still such invaluable tools to use, when transferring inherited property from parent to child-beneficiary, in order to avoid property reassessment at such dangerously high current tax rates; plus other challenging taxes and obstacles.