Wholesale Loans to Irrevocable Trusts and Estates in Probate throughout California

We specialize in Proposition 58 compliant lending to irrevocable trusts and estates in probate throughout California. If you are a licensed California mortgage broker, and have a client who needs a loan funded directly to an irrevocable trust or estate in probate to take advantage of Prop 58’s exclusion for property tax reassessment, please call us at (877) 427-9820.

Our loans are a necessary step in accordance with California’s Revenue and Taxation code 63.1 to qualify for an exclusion from reassessment of property taxes. We use our own capital, provide swift review and approval, flexible underwriting and terms, no prepayment penalties or minimum months of interest, and availability of funds within 7-10 days in most cases. While some beneficiaries may choose to repay our loan within a matter of days, others may need time to facilitate the equalization and distribution process, and secure conventional financing once the property has been transferred from the trust or estate to the beneficiary retaining the property. Our terms provide ample time and flexibility in either scenario.

Broker Fees

We are transparent with our interest rates and associated fees/closing costs. As a mortgage broker, you will be compensated by the fees (typically between 1 and 2 points) you add on top of our fees.

A Few Important Considerations

  • The beneficiary retaining the property will need to keep it long enough for the property tax savings to offset the expense of the private loan. If their plan is to sell in the near-term, it likely will not make financial sense to take this additional step.
  • The exclusion from reassessment is not automatic, an attorney will likely need to assist with filing the necessary documentation/forms.
  • Conventional financing cannot commence until the subject property has been transferred into the beneficiary’s name that is retaining the property.
  • We work hand-in-hand with mortgage brokers to provide all necessary documentation to expedite the refinance process.

Please call us with questions or to submit a loan at (877) 427-9820

Important details related to loans to Trusts and Estates in Probate and California’s Proposition 58

Mortgage brokers run into these types of transactions from time to time, and it is important to note that transactions to take advantage of Proposition 58 must be done in a certain way, or the beneficiary retaining the property at distribution risks reassessment. The rules for these transactions are found in California Revenue and Taxation Code 63.1, which is specific in relation to the need for trusts to equalize distributions in order to take advantage of Proposition 58. If a trust or estate needs to equalize the distribution by taking a 3rd party loan, there are several factors that need to be taken into consideration:

The beneficiary retaining the property cannot; put money into the trust to equalize the distribution, be the 3rd party lender to the trust, personally guarantee the 3rd party loan to the trust, own any portion of the entity lending money to the trust.

The Board of Equalization does not permit the loan to be structured as a For Sale by Owner between the trust and the beneficiary retaining the property because ultimately the funds being contributed to the trust would come from said beneficiary. When this type of transaction is discovered, it will

result in the reassessment of the property. The loan must be made directly to the irrevocable trust with no personal guarantee from the trustee or beneficiary inheriting the home. Please call us with any questions you may have or for a copy of the letter from the California Board of Equalization.

Don’t make the mistake we’ve seen all too often, where a mortgage broker takes the property out of the trust in order to fund the loan and then return the property to the trust afterward (Conventional loan guidelines do not allow funding to irrevocable trusts). This sequence of transactions will cause a reassessment, and disqualify the beneficiary from Proposition 58 exclusion from reassessment.

With an increasingly watchful eye from assessor’s offices, it is imperative that the necessary steps laid out by the Board of Equalization are followed to avoid a costly reassessment.

Please call us at (877) 427-9820 with any questions, or to submit a loan for approval.