Tag Archives: Probate loans

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

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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.

 “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

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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.

>> Click Here to go to Part Two…

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

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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/

 

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

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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 SIX: Coronavirus Crisis in California Motivating Certain Politicians to Push Harder for “Split-Roll” Property Tax

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The Property Taxes In California

The Property Taxes In California

The infamous Proposition 15 Split-Roll property tax is naturally unpopular with most Californians… Of course, when did popular preference ever convince politicians of a certain stripe to do anything!  They typically do what will benefit them. 

At any rate, most Californians realize this new property tax, initially titled “Proposition 13 / Split-Roll Property Tax” and now called “Proposition 15”  will end up raising prices of goods and services all across California… Not to mention increasing industrial and commercial rents, not only causing their prices to go up, but worse case scenario forcing many middle class companies to simply close their doors! Or to move out of state… if they’re lucky.  And it’s definitely worth mentioning that minority owned businesses, and other concerns that are bravely holding on without tremendous cash reserves, will be particularly hard hit and negatively impacted.

The fact that (as Jon Coupal, President of the Howard Jarvis Taxpayers Association, says) “tax-hungry public sector labor interests” are determine to strip away genuine Proposition 13 property tax relief protection from business properties and industrial facilities, to bank what they believe will be something in the neighborhood of six to twelve billion dollars per year from property taxes. 

Interestingly enough, even their gross property tax intake projection is tremendously inaccurate and uneven!  If their math is that volatile at merely the initial projection stage, at this point – what will it look like when taxation revenue wheels are turning for real?  Their Proposition 15 measure on the November ballot would apparently  need constant reassessment of business properties, revising the 2% cap in yearly increases; exactly to what degree no one really knows.

Fortunately, most of the public is either old enough to remember, or has older relatives that do remember, what life was like in California before the 1978 Proposition 13 property tax relief measure was passed… Ending up saving property owners and beneficiaries or heirs of estates thousands of dollars in property taxes every year, simply by being able to avoid property tax reassessment in CA. 

It’s fairly obvious to most of us that the new property tax entitled Proposition 15 is guaranteed to not accomplish what critics of property tax relief insist it will accomplish. The outcome is rather clear.  It will merely end up increasing consumer rents;  severely raising commercial and industrial rents; raising the cost of countless goods and services favored by consumers; and force who knows how many mid level companies to go out of business… all across the great Sunshine State.  A colossal disaster, with numerous tentacles, just waiting to happen.  

Californians can never lose sight of what Proposition 13 has accomplished for them, as well as property tax transfer benefits from Proposition 58, from parents; and Proposition 193, from grandparents.  Moreover, what that form of genuine property tax relief really looks like, and exactly what it provides Californians with!  Moreover, fighting a war against a Pandemic, with tens of millions of job losses resulting from the Covid-19 crisis — nothing would help middle class, upper middle class and working class Americans more right now than a nation-wide system of property tax breaks mirroring Proposition 13 & Proposition 58 property tax relief.

Starting with the ability to avoid property tax reassessment in CA… and moving into the legal right, for the very first time, for beneficiaries and property owners in California to be able to transfer parents property taxes upon inheriting property taxes from inherited property; with the ability to keep parents property taxes, and to keep it at the usual Proposition 13 low 2% capped property tax base… For any property tax transfer from parent to offspring, or as they say “parent to child transfer” or “parent to child exclusion”. 

Exclusion, that is, from current property tax reassessment. The right to avoid property tax reassessment in CA is indeed unique, as no other state even comes close to providing this type of middle class property tax relief. And anyone who attempts to come up with  unrealistic reasons to destroy these tax breaks – claiming it’s only for wealthy Californians, or that it’s really all about seniors intentionally keeping their property off the market for this reason or for that reason – is, frankly, delving into fiction. These claims are either exaggerated, or just simply untrue.  

Faced with higher property taxes, commercial property owners with leases will most  likely be motivated to pass these increased costs on to their tenants.  For example, the owners of  shopping centers or strip-malls, with numerous commercial tenants, would be faced with  increased property taxes if the Proposition 15 / Split-Roll tax passes…   and will, without question, increase the rent of every concern you go into every week to purchase new  goods, as well as products you pretty much cannot do without.

As we’ve already indicated here, when faced with more expensive rents, business tenants will be forced to increase the pricing of their products or services, obviously to offset significantly higher rents… The long and the short of it?  This supposedly “revised” Proposition 15 Split-Roll commercial & industrial property tax (cleverly devised reassessment exemption or no reassessment exemption!)  will increase the cost of living across the board for all Californians, right down the line – as sure as we breathe oxygen and need clean air.  

>> Click Here: To Continue to Part Seven…

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

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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…

PART FOUR: Coronavirus Crisis in California Motivating State Politicians to Increase Efforts to Pass “Split-Roll” Property Tax

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California Property Taxes and Covid

California Property Taxes and Covid

We’d like to take a closer look here at how The California Association of Realtors (aka, C.A.R.) and others continue to monitor and forecast the affect that the Coronavirus crisis is having specifically on the fluid  2020 California housing market – on the overall demand for middle class housing, and on the adverse affect the crisis is having on the cost and process of new home construction, fixer-uppers, and so on.

Taking into account over 42.1 million people in America now out of work, having signed up for Unemployment benefits – and 3,018,000 working people in California now jobless, as of May 2020, as official government statistics tell us – this obviously has had, and continues to have, a significant affect on estates and inheritance distribution scheduling, as well as the housing market throughout the entire state.

As we all know, or should know, the Coronavirus health crisis, and economic disaster are intertwined, and cannot be separated in order to “fix” one or the other, contrary to what certain political figures currently believe. One cannot “open” the economy and “fix” that – without first resolving the health issues, as infectious disease experts such as Dr. Fauci and others have stated repeatedly over the past four months.

The health crisis has had an an adverse affect on live viewings concerning residential properties, as well as commercial and industrial facilities and buildings that, if the deceptively simple Split-Roll Proposition 15 property tax were to pass in November 2020 and be imposed on these property owners, landlords, and even renters, we would see the effective unraveling of 1978 Proposition 13 property tax relief benefits for non residential properties and facilities.

Supposedly not affecting home owners and beneficiaries’ right to transfer parents property taxes when inheriting property taxes from parents; Supposedly not having any affect at all on Californians’ ability to keep parents California property taxes upon property tax transfer; and supposedly no obstruction of parent to child transfer or parent to child exclusion.  Supposedly.  And are we to believe all this, sight unseen? It’s questionable… to say the least.   

If passed, and ones ability keep parents California property taxes is taken away, Californians all know that this new ill advised property tax will cause a substantial increase in rents across the board concerning both business and residential rentals – an outcome that many Californians do not yet seem to be fully aware of.

If the proposed property tax is passed, it’s a given that there will be a massively unpopular increase in prices of goods and services throughout California, strictly due to more expensive rentals imposed on businesses that are renters. Businesses that own their own property will be paying higher property taxes and so will assuredly be charging more for their goods and services.

This Proposition Split-Roll tax is bound to affect retail stores, supermarkets, and properties that house these retailers as well as restaurants, multi-tenant and single-tenant stand-alone buildings; shopping centers, strip-malls, banks, pharmacies… affecting the price of goods at popular stores such as Target, Walmart, Best Buy, movie theatres, Casinos, Resorts and Hotels… Multi-tenant and single-tenant office buildings; Medical office buildings and facilities.

And lest we forget, so critical to the California economy, agricultural and manufacturing facilities.  Plus the numerous research and development facilities that are typically associated with those business categories.

>> Click Here: to continue to Part Five…

PART TWO: Coronavirus Crisis in California Motivating State Politicians to Push Harder for “Split-Roll” Property Tax

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California Property Tax Changes

California Property Tax Changes

Even without California’s ill-advised Split-Roll property tax measure looming over every renter and residential as well as commercial property owners’  head throughout the sunshine state — California has already been grappling with lopsided expenditures such as over-spending on state & local government  salary increases, healthcare benefits, and lavish vacation time… Rather than budgeting properly for public works that would actually be beneficial for regular every-day Californians rather than folks with elite government positions.

Residents of this state are already dealing with unusually high taxation (other than property taxes), and other challenging regulations that make it difficult as it is for California businesses to compete effectively in a number of important and popular industrial and commercial playing fields.  

Let’s face facts… an $11 billion Split-Roll property tax increase  on business and commercial property owners would, without question, prevent businesses based in California from hiring new employees;  and would make it more difficult to retain existing employees.  

And you can forget about Christmas bonuses and/or timely raises, not to mention maintaining proper levels of health coverage!  It’s obvious that stability and predictability provided by 1978 Proposition 13 property tax relief has helped businesses in California to compete on a national level regardless of the fact that doing business in California is expensive to begin with!

Even if correctly managed, tax assessments will mirror the ups and downs of  the real estate market in  California— resulting in volatility, the way things were prior to 1978 when Proposition 13 was passed into law.  During low economic times this would most likely end up leading the state into an even more severe loss of revenue. 

If you think back… during the 2008— 2009 recession, commercial property values dropped by over 35%, mainly due to the economic recession.  These abrupt and  unpredictable economic shifts are what motivated unease and unhappiness among California property owners before 1978, and ultimately led to the big win pushed by the Howard Jarvis Taxpayers Association and others, leading ultimately to the passage of  Proposition 13 in the first place. 

Proposition 13 stabilized the property tax revenue system by capping property taxation at 2% plus nailing down property owners’ right to avoid property tax reassessment… with other stabilizing influences,   rules and iron clad regulations favoring the taxpayer for the first time.

Much to most beneficiaries’ surprise, it also became possible for estates to entertain certain options, where none existed previously; such as beneficiaries who were intent on retaining inherited property from parents now being able to buyout siblings that wanted to sell their property shares… Through a loan to an irrevocable trust, working alongside CA Proposition 58. 

Trust loans have become popular throughout California, to resolve heated sibling “inherited-property conflicts”, working in tandem with CA Proposition 58,  once those beneficiaries looking to keep inherited property actually qualified – enabling their co-beneficiaries to buyout siblings’ shares of a home usually… typically called a “beneficiary buyout of sibling property shares”.

While at the same time the siblings keeping the home were now able to legally avoid property tax reassessment, by using a trust loan to buyout a sibling’s share of an inherited house – or, as realtors call it, “a transfer of property between siblings” or “sibling to sibling property transfer” – whereas regular middle class folks simply refer to the process as “getting cash from a trust loan to buyout siblings’ shares in inherited property”.  Most people prefer to keep things simple.  As we do.

It  was unthinkable that the bad old days would even have a remote chance of returning…  Until now. 

>> Click Here: to Continue to Part Three…

PART ONE: Coronavirus Crisis in California Motivating State Politicians to Push Harder for “Split-Roll” Property Tax

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California Property Taxes

California Property Taxes

The Coronavirus crisis is having a profound effect on various social-economic facets in California, however we will be focusing to a large degree on the real estate market, residential and commercial property issues, and property tax relief.

Moreover, the Coronavirus Pandemic has also apparently infused new support for the Split-Roll property tax in California, to pursue what would without question (if passed) be a “Pyrrhic victory”.  For those of you who might not know what that means, it’s a victory that results in such devastation to the so-called “victor” that the outcome may as well be an actual defeat! Named after King Pyrrhus of Epirus, his army suffered irreplaceable casualties in defeating the Romans at the Battle of Heraclea, in 280 BC.

At any rate, if this misguided property tax measure wins by vote in November at the ballot, many politicians and newspaper editors falsely believe that this revision to the commercial property tax code will “raise billions of dollars for cash-strapped schools and California counties”… with no negative downside. 

Now there is where they are taking the wrong turn in the road.  They even have California Secretary of State Alex Padilla drinking the Cool-Aid, and  taking a stand as primary cheerleader for this tax on middle class small business property owners, modest landlords, and so on. 

Yes, some large cash-rich corporations and wealthy business property owners and landlords will be impacted, of course.  But the critics of Proposition 13 and Proposition 58 tax relief still are continuously attempting to convince  all of us that everyone affected by a business or commercial property tax will be super rich, and therefore it won’t really matter.  

Not so. Not even close to being so.  Sure, a Split-Roll property tax will affect some wealthy commercial property owners… but many  commercial properties are owned by middle class landlords, or even upper middle class commercial property owners basically leveraged to the hilt.  But wealthy?  No.  

In fact, many of these property owners and landlords are just “getting by” – and a property tax like the one these anti property tax relief politicos and newspaper editors want to impose on commercial property owners with the falsely named “Proposition 13” property tax (“coincidentally” with the same title as the 1978  genuine Proposition 13 tax relief measure… simply to confuse voters) would surely serve to destroy hundreds if not thousands of these modest or small business property owners.  With the end result being widespread foreclosure and bankruptcy, obviously.

Not to mention business tenants having to deal with increased rents they will no longer be able to afford… and so all of these goods and services from one end of California to the other will increase virtually overnight!  And we’ll discuss these disastrous side effects later on in this six-part article.

Interestingly enough, none of these critics of the authentic 1978 Proposition 13 tax relief measure acknowledge that any of these negative and dangerous outcomes are a realistic possibility.  They dance around the fact that small businesses and most landlords  in California will not be able to absorb immediate rent increases due to property tax reassessment. 

On the other hand, if small businesses in California aren’t able to raise prices – they will most likely be forced to cut internal costs, which will include cutting employee compensation and benefits, and/or laying off employees.  So we’ll have even more people out of work.  And some of these small businesses, and perhaps larger businesses as well, will have to relocate, or worse case scenario will go completely out of business – creating an oversupply of commercial space AND higher vacancy rates, which would cause commercial property rents and values to actually decline.  Yet another hidden problem. 

This will end up decreasing  job opportunities in California, due to decreased economic activity overall throughout the state. 

This is the guaranteed downside of the Split-Roll tax that, believe it or not, Secretary of State Padilla and other political critics of property tax relief in California are not looking at.  They would do well to start looking… or they are going to step into a disastrous quagmire of their own making, if this property tax actually passes in November. 

Another key point to consider, while we’re on the subject.  Even though politicians on the state and local level claim that a “revised  Prop 13 with Split-Roll tax” includes “a small-business exemption” – it would be advisable to not buy into these vague promises from local politicians whose word is highly suspect at best!  A suspect Split-Roll tax with a reassessment exemption that is highly questionable is only for the most naive of us to believe. 

A Split-Roll tax, supposedly only imposed on commercial property owners in California will be deeply crippling for many if  not all businesses and commercial entities that own business property in California.  The revised property tax 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.  Frankly, this sounds like double-talk to most of us.

One of “us” being Rob Gutierrez,  President of California Taxpayers Association. Mr. Gutierrez says these supposed “protections” for small businesses, a Split-Roll tax with a reassessment exemption that isn’t even close to being strong enough to allow these business owners to survive… with thousands of jobs that would have been for Californians, down the drain!  More people on the Unemployment  Line.  A Split-Roll tax with a reassessment exemption, that is basically worthless. Next, when we’re not looking, they’ll target consumer property tax relief, as well as Prop 13, avoiding property tax reassessment; and Proposition   58 property transfer tax breaks and trust loan tax benefits from trust lenders… That’s their playbook.

“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”, Mr. Gutierrez says… “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, plus lay workers off…” 

And as usual, who does this get passed on to?  All of us.  The consumers.

>> Click Here: to Continue to Part Two…

PART FOUR: Irrevocable Trust Distribution Loans

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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.