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07/27/2019

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Geoffrey Sadler

OK so Spendthrift Clauses are good for creditors in California; and they’re used to control beneficiaries who have poor money skills… fine. However, not so helpful to beneficiaries who need cash before distribution is scheduled, as in a trust fund advance, otherwise known as an estate loan, are out of luck if the trust they are receiving money and/or real property from, has a Spendthrift Provision. Spendthrift trusts don’t allow beneficiaries in California to do anything with their inheritance in advance of scheduled final distribution rules & regs. Not good if you’re a beneficiary or heir in need of cash. However there is one trust option they do have if they are obstructed by a Spendthrift Clause – they can look to the California Proposition 58 tax break, which works hand in hand with a loan to an irrevocable trust to take some cash for themselves, to pay off closing costs and expenses in order to keep inherited property despite other co-beneficiaries insisting on selling the property – and here is the interesting part – while buying out those co-beneficiaries who were determined to sell their shares to an outside buyer. Without any sale, so they can retain the property, without issues. Californians are rather fortunate this way. Not only do they have Prop 58 to keep their yearly taxes down, even if they have a trust with a Spendthrift Clause, they can still get a trust loan, plus transfer parents property taxes while inheriting property, inheriting property taxes which are at a very low tax rate base from Proposition 13 as you probably know… Their property tax transfer, known as a parent to child transfer or parent to child exclusion, will always be low, at 2% or less. And with their trust loan cash fortunate beneficiaries can always buy out siblings share of a house, known as sibling to sibling property transfer — or transfer of property between siblings. No matter what you call it, beneficiaries in California enjoy property tax transfer at rates that EVERY state in America should be enjoying. Only Oregon is close with a 3% tax base while, like in California, beneficiaries can avoid property tax reassessment at current rates. Why no other state in this country has similar property tax breaks for middle class beneficiaries and home owners or business property owners – is, frankly, a mystery to anyone with common sense. This is exactly why many beneficiaries carefully research trust loan benefits, with or without a Spendthrift Clause, the trust fund process, Proposition 13 and Prop 58… at official Websites like https://www.boe.ca.gov/proptaxes/proptax.htm, covering California Proposition 58 thoroughly... Plus blogs and sites like https://propertytaxtransfertrusts.com or business Websites such as https://cloanc.com/category/prop-58 – that focus on both Proposition 13 and Proposition 58 – explaining how a trust loans from trust lenders “equalize liquidation” – getting cash to beneficiaries who want to sell their shares in inherited property, so everyone walks away happy as clams.

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