Irrevocable Trust Loan Lenders
for California Real Estate

North Coast Financial is a private money lender specializing in irrevocable trust loans for California real estate. With over 40 years of private money lending experience and over $1 billion funded, North Coast Financial is able to provide short-term, fast and flexible financing solutions for trustees and beneficiaries of irrevocable trusts.

Whether the irrevocable trust loan is needed to pay for trust expenses, buyout other beneficiaries or preserve a property tax basis, North Coast Financial has the expertise to provide financing directly to the irrevocable trust at reasonable rates and fees with friendly customer service (customer reviews).

Contact North Coast Financial now for a free consultation with a California irrevocable trust loan expert.

Irrevocable Trust Loan Lenders in California

When managing an irrevocable trust with real estate assets in California, beneficiaries and trustees often face unique financial challenges that traditional lenders cannot help with. Whether you’re looking to buy out other beneficiaries, cover trust expenses, or preserve a property tax basis with Prop 19, utilizing specialized California irrevocable trust loan lenders such as North Coast Financial can provide the needed funding to accomplish the goals of the successor trustees and beneficiaries.

Irrevocable trust loans provide a financing solution for trustees and beneficiaries who need access to the equity in trust-owned real estate without selling them. Unlike traditional mortgages, these specialized trust loans are made directly to the irrevocable trust which provides unique benefits that can save California property owners thousands of dollars annually in property taxes.

Traditional banks and financial institutions do not lend directly to irrevocable trusts due to the complexity of trust ownership structures and the specialized knowledge required to make this type of loan. This results in a significant gap in the lending market for irrevocable trusts that specialized irrevocable trust loan lenders in California are able to provide.

What is an Irrevocable Trust?

A trust can start out as an irrevocable trust or it can begin as a revocable trust and then become irrevocable once the original trustor(s) passes away.

An irrevocable trust is a legal arrangement where the creator of the trust (known as the trustor or grantor) transfers ownership of their assets into the trust and relinquishes all rights to modify or revoke the trust. Once established, an irrevocable trust becomes a separate legal entity with its own tax identification number and the assets placed within it are no longer considered owned by the trustor.

Unlike revocable trusts, which can be altered or dissolved by the trustor during their lifetime, irrevocable trusts are designed to not be changed. When the original trustors of a revocable trust pass away, the revocable trust automatically become irrevocable. At this point, the successor trustee assumes responsibility for managing the irrevocable trust’s assets according to the terms in the trust documents.

Can an Irrevocable Trust Get a Loan?

Yes, an irrevocable trust can obtain a loan in California, but the process is significantly different from traditional borrowing. When a property is held in an irrevocable trust, the trust owns the property, not an individual. This creates a unique situation that prevents traditional financial institutions from being able to lend.

Traditional lenders like banks and credit unions typically decline to provide loans directly to irrevocable trusts for several reasons including complex trust structures, underwriting challenges and regulatory issues.

This is where specialized irrevocable trust loan lenders step in to provide their services. These lenders are typically private money lenders or hard money lenders with expertise in the complexities of irrevocable trust lending. They understand the unique legal and financial considerations involved and can provide loans directly to the irrevocable trust using the trust-owned real estate as collateral.

For a trust to qualify for a loan, several conditions must typically be met:

• The trust documents must permit (or not prevent) the trustee to encumber trust assets
• The property must have sufficient equity to secure the loan relative to the loan amount being requested
• The successor trustee must have the authority to act on behalf of the trust
• The successor trustee or beneficiaries must have a reasonable exit strategy for how the short-term irrevocable trust loan will ultimately be repaid

How Irrevocable Trust Loans in California Work

Trust loans in California are essentially equity loans against real property held within the irrevocable trust. The process begins when a successor trustee, acting on behalf of the trust, applies for financing with the trust-owned real estate as collateral.

The irrevocable trust loan lender will first review the trust application forms and trust documents to verify that the trustee has the authority to borrow against trust assets. This legal review is necessary since the lender must ensure that the loan complies with the terms established by the original trustor.

Once the lender confirms the successor trustee’s ability to borrow on behalf of the trust, they will evaluate the property’s value and any existing loans or liens to determine how much equity is available for borrowing and what loan amount will be available. Unlike traditional mortgages that focus heavily on the borrower’s income and credit score, trust loans primarily consider the property’s equity position.

The successor trustee and beneficiaries will need to disclose their exit strategy for the loan. Irrevocable trust loans are typically only for short-terms of 12-24 months which will require the trustee or beneficiary to sell the property, refinance the property once transferred into the name of an individual or have the loan repaid with cash.

Irrevocable Trust Loan Process

In California, the trust loan process typically includes these steps:

1. Initial consultation: The trustee discusses needs and options with a specialized trust lender.
2. Document submission: The trustee provides application forms, trust documents, property information and other required paperwork.
3. Legal review: The lender reviews the trust documents to confirm borrowing ability.
4. Property valuation: The lender determines the current market value of the trust property.
5. Loan approval: Based on equity position and trust terms, the lender approves a specific loan amount.
6. Closing: Loan disclosures and documents are signed by the successor trustee on behalf of the trust.
7. Funding: Loan proceeds are deposited into the trust’s bank account.
8. Distribution: The trustee distributes funds according to trust terms and loan purpose.

If approved, the loan proceeds go directly to the trust’s bank account, not to any individual beneficiary. The trustee then distributes these funds according to the trust’s terms and the specific purpose of the loan, whether it’s paying expenses, equalizing distributions among beneficiaries or another approved purpose.

California trust loans can typically be funded in as little as 7-10 days after document submission, which is significantly faster than traditional financing. This quick timeline is particularly important when trustees need to act promptly to manage trust assets effectively or meet court-imposed deadlines.

The information provided herein is for educational purposes only. North Coast Financial is not providing any legal, tax or financial advice.