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Estate Loans: Creative Liquidity Solution

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Estate Loans Help to Keep Real Property in the Family

You’ve lost a loved one. Not only are you heartbroken but you were chosen to administer the estate so now you’re stressed. It’s too much. You’re overwhelmed and who can blame you? Not to fear. There’s a solution. Estate loans are one of the most popular and beneficial ways to administer an estate. With an estate loan you can finance estate debt pay attorney fees and even buy-out the interests of other heirs in the estate. This leads to less stress on the administrator and more beneficial outcome for the beneficiaries. Win win!

If you’re an executor of an estate you may obtain an estate loan, borrow on the behalf of the estate and sign in that capacity. Using an estate loan to secure financing from real property vested in trust solves many problems. Just like any other loan however there are a few conditions that must be met to ensure a smooth transaction, not to mention the legalities of administering estate loans.

Traditional mortgage lenders consistently deny consumer requests for estate loans as they are highly specialized and require additional documentation and legal expertise lenders don’t possess. There is also no secondary market for estate loans.

Creative Solutions – Let it Ride or Cash Out

estate loans - money houseOur estate planning attorneys have helped executors administer estates by providing flexible options that account for and benefit all beneficiaries of an estate.

For example, after their mother died the only asset – family home – needed to be sold with the proceeds divided between her three children.

Joan an heir to the estate wanted to keep the property in the family. Joan also wanted to keep the same low real property tax basis in the home.

The two other heirs wanted to sell the home and distribute the proceeds.

The problem – there was no cash in the estate to do what the siblings desired.

One solution would be to distribute the home to Joan. Joan would obtain a loan on the home to pay-off her siblings. The problem is that the home tax base would increase relative to 66 2/3% of fair market value.

We provide an alternative and superior solution.

By arranging for a short-term private money loan advance to the executor or trustee sufficient cash will be available in the estate to satisfy the cash required to pay the siblings.

The home subject to the loan can thereafter be distributed to Joan who can keep the home and maintain the low real estate tax basis. Problem solved.







About Sean Hanley

Practicing law since 2007, Sean specializes in the ever-changing laws related to real estate, business and estate planning. Embracing technology with a focus on personalized service, he understands the challenges of living and thriving in Silicon Valley. Tapping into his education in economics and business administration, Sean also serves on the non-profit Willow Glen Business Association.

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