It would be best, in choosing a trust lender, to pick a firm that is a self-funded private lender, offers a fast approval process, has flexible underwriting terms, has no prepayment penalties, has no minimum monthly interest, and can fund a trust within a 7-10 day period.
This process may look simple when discussing from behind a desk, however it is not as simple as it appears. By leveraging cash from a private loan in conjunction with an agreement between the heirs, executors and trustees can provide a valuable service to families who otherwise would have to forfeit their valuable real estate in the course of estate administration.
Parental property is typically an older home with a little land, and a host of memories and emotional attachments… Beneficiaries of this type of middle class inheritance that don’t execute a personal loan to a trust in conjunction with Proposition 19 to equalize that trust would be viewed as beneficiaries looking to sell their shares in that property simply taking a payment from siblings looking to keep their inherited property.
The outcome of this would be a “transfer between beneficiaries”, without the ability to keep inherited property at a low base rate, that is to say, your parents’ low property tax base, as opposed to a “transfer from parent to child”, the type of transfers between parent and child that enable exclusion from reappraisal. Side-stepping this process would disqualify the transfer from operating under the parent-to-child exclusion. As the BOE interprets it. And this involves benefits all the way down the line.
Avoiding a loan to an irrevocable trust will disqualify new homeowners and beneficiaries inheriting property from being able to keep parents property taxes when inheriting property taxes during property tax transfers – more specifically being able to keep parents property taxes. Not utilizing a trust loan with a trust lender will make it impossible to keep inherited property at a low base rate as would be possible through a parent-to-child transfer and parent-to-child exclusion (from paying current property tax rates).
The same goes for the right to transfer parents property taxes alongside inheriting parents property and inheriting parents property taxes to avoid property tax reassessment. Obviously, a trust loan is well worth not ignoring, when your inheritance calls for it, in concert with Prop 19, formerly Proposition 58.
Middle class and even upper middle class estates and trusts with limited funds, or “liquidity” would lose these critical tax benefits if the estate or trust has no resources available which would allow heirs or beneficiaries to retain the old family home. Hence, the California Board of Equalization has sanctioned third-party real estate loans to trusts to “equalize” the value of beneficiaries’ interests in the trust assets while keeping the allowed property tax exclusion from tax reassessment (at current updated rates).
“California was pretty bad before 1978, when Proposition 13 tax relief went into affect. California was raising taxes more than any other state, before 1978. Most seniors – before Prop 13 – were reassessed at present-day rates. And many, many were forced out of their home. They simply could not afford the property tax hikes descending on them. Period. People, especially older people, were being impacted with higher property taxes year after year. And in many cases – with catastrophic results, obviously.
Commercial Loan Corporation reachable at (877)756-4454, loans to trusts give my clients several invaluable benefits. Their terms can be a lot more flexible than an institutional lender like Wells Fargo or Bank of America. Also, Commercial Loan Corp is self funded, and that’s basically why they can extend easier terms to clients. Compliance for both commercial and residential property owners is far less strict.
Commercial Loan Corp doesn’t charge any fees up-front, that’s another great benefit. Plus, they don’t require paying interest on their trust loan in advance. Not only that, there is never a “due-on-sale” clause… that requires the mortgage to be repaid in full when sold; or that all or some of the interest owed must be paid up-front to secure the mortgage. No “alienation clause”… in the event of a property transfer, stating that the borrower has to pay back the mortgage in full before the borrower can transfer the property to another person. There is none of that.
The speed of their trust loans is much faster, typically five to seven days instead of two or three weeks. And if you sold a property outright, without using a trust loan, you have closing costs, legal fees; a commission; etc. It gets very expensive. Going with a firm like Commercial Loan Corp – costs are offset.”
When Mr. Kerry Smith speaks… people listen.