We spoke again in Dec. 2020 with California Trust and Estate Loan Account Executive Kenneth McNabb at Commercial Loan Corporation, in Newport Beach, CA; regarding process specifics, concerning Trust and Estate Funding, and how he deals with both prospects and attorneys who are frequently unfamiliar with the trust loan process and Proposition 58 particulars…
Property Tax Transfer: Kenneth, thank you so much for joining us again today, to chat about your company, and how trust loans to beneficiaries and the Proposition 58 process, is working for your clients. We believe it’s especially important right now for heirs of estates, trust beneficiaries, and homeowners in general, to understand how this process works, and how Proposition 58 ties into trust loans for beneficiaries – since new limitations to ones ability to access the Proposition 58 parent to child exclusion benefit is going into effect after Feb. 16, 2021 – even though beneficiaries will apparently still be able to access trust loan funding, and families will still be able to lock down a lower property tax base through the firm’s funding process of enabling a trust loan to a beneficiary; but with more restricted and challenging uses of the parent to child exemption, or as realtors in California as well as many real estate lawyers and property tax attorneys prefer to refer to it, the parent to child exclusion benefit or the parent-child exemption tax benefit.
Kenneth McNabb: It’s my pleasure to be here. And yes, I agree with you – it is terribly important right now with all the changes happening regarding property tax relief, for folks to understand basically how this process works, and if it can work directly for them, to lower property taxes by taking advantage of Prop 58’s parent to child exclusion benefit, as you say, or to buyout a sibling who wishes to sell their inherited property shares…
Property Tax Transfer: Yes, certainly. Kenneth, I have a quick question about the folks you speak to every day – do you deal primarily with attorneys, these days? Or prospective clients, beneficiaries… And what typically do these folks want to know, right off the bat?
Kenneth McNabb: I speak to both attorneys and clients. If it’s a prospective client, they are generally looking to take advantage of Proposition 58 and a trust loan. My main objective with first time callers is to see if they, or rather their situation, is going to qualify for a trust loan… and if a trust loan is going to make sense for them. As far as attorneys are concerned, they are typically calling on behalf of a specific client of theirs, and they usually have general questions regarding that client’s needs, whether it’s to buyout a co-beneficiary, or to lower their property taxes on a home recently inherited from a parent.
Property Tax Transfer: Kenneth, how do you typically explain the firm’s core services? Especially for folks who are more or less unfamiliar with trust loans and Proposition 58 benefits.
Kenneth McNabb: Well, I generally tell a beneficiary inheriting a parent’s home that our process will help them save thousands of dollars in property taxes every year, as long as they can take advantage of Proposition 58.
Property Tax Transfer: Who actually can apply for Proposition 58, and for a trust loan with Commercial Loan Corp?
Kenneth McNabb: Pretty much anyone, usually the trustee, or a beneficiary of the trust the family already has in place. As long as they meet the criteria to get approved for the trust loan amount that is being requested.
Property Tax Transfer: On average, how much would you say you generally save clients per year in property taxes?
Kenneth McNabb: An average client saves about $6,200 per year and sometimes more than $10,000. Depending on the year the property in question was purchased… or simply the property value itself.
Property Tax Transfer: Really. I didn’t know that. That’s great. Is the trust loan application process itself complicated?
Kenneth McNabb: No, it’s a very simple, straight forward process… The application is for verifying the trust, not the people involved. The loan is made directly to the irrevocable trust, so low income, poor credit or low credit doesn’t affect that part of the process at all. That’s what makes the application easy for borrowers as opposed to, say, a bank loan. However, for the repayment part of the application credit and income may enter into it due to re-payment requirements. The repayment application is completely separate – and requirements depend mainly on the chosen repayment method – how a client chooses to repay the trust loan.
Property Tax Transfer: Kenneth, I’ve been meaning to ask you – do folks need an attorney to go through this process, to get a trust loan? What if one doesn’t have a lawyer, or doesn’t know how to get the right kind of attorney?
Kenneth McNabb: Having an attorney is not required, but it is recommended. If applicants don’t have an attorney we’ll find them a good lawyer to work with.
Property Tax Transfer: Objectively speaking, would you say the underwriting guidelines are rigid, or flexible?
Kenneth McNabb: Underwriting guidelines are extremely simple, and straight forward.
Property Tax Transfer: Is there a credit score minimum?
Kenneth McNabb: No, there is no credit score minimum. But we do have to verify the assets and the people in the trust, the beneficiaries…
Property Tax Transfer: Yes of course. Plus, it looks like, enabling your clients to buyout siblings’ property shares with the right to “sibling-to-sibling property transfer”, avoiding property tax reassessment, and the ability to transfer parents property taxes when inheriting property taxes, on any property tax transfer from your mom or a dad, it seems.
Kenneth McNabb: Yes, that’s correct.
Property Tax Transfer: So, is the actual paperwork involved weighty and difficult to deal with? Can clients get help with that?
Kenneth McNabb: There is not much paperwork to deal with. A death certificate, trustee ID form, trustee authorization, and an appraisal showing property value.
Property Tax Transfer: Are there any prepayment penalties?
Kenneth McNabb: No, we don’t charge prepayment penalties; and there are no “required months of interest”.
Property Tax Transfer: How long does it usually take to close a trust loan with your firm?
Kenneth McNabb: It’s case by case… But we do move quickly. Usually in as little as 7 to 10 business days.
Property Tax Transfer: Kenneth, what is the deal with most lenders? Why are most lenders not willing or unable to lend to a trust?
Kenneth McNabb: There is no personal guarantee. It’s lending to an entity, an irrevocable trust… It’s not a personal loan.
Property Tax Transfer: Why is it so important to be California Proposition 58 compliant?
Kenneth McNabb: Prop 58 is just a massive tax savings… beneficial to any homeowner in California. It returns the advantage to pass down their low Prop 13 tax base to their children..
Property Tax Transfer: I see. Well, thanks very much sir. Appreciate your talking with us today!
Kenneth McNabb: I enjoyed our chat. Thanks for having me.
Property Tax Transfer: Ken, how can someone reach you if they have questions on California Proposition 58, Proposition 19 or on a loan to a trust?
Kenneth McNabb: They can call us at 877-464-1066. We are happy to answer any questions they might have or provide them with a free cost benefit analysis and let them know how much a Proposition 58’s parent to child exclusion from reassessment may save them.