Estate Loan to Buyout Siblings in California

Lenders providing estate and probate loans most typically will be interested in making the loan as long as the value of the property versus any amount already owed has a wide enough spread. Depending on many factors, they can lend anywhere from 60% to 70% of the value of the inherited property. When the proceeds are disbursed, the estate loan money goes directly into the bank account of the estate. Subsequently, the funds can be distributed to the siblings. Once this occurs, the siblings have received their money and no longer have ownership interest in the property they inherited.

Once completed, the sibling has accomplished sole ownership of the property. The title can finally be transferred from the name of the estate into their personal name. It is at this point they can finally speak to a conventional lender about getting a lower-priced loan. They will be able to do this because the title of the property will finally be in their individual name.

Unquestionably, buying out siblings by utilizing an estate loan is the easiest and quickest way to divide an interest in a property inherited by multiple beneficiaries. Let’s not forget, a home equity loan on inherited properties also provides the beneficiary an opportunity to capitalize on prop 58. Doing so will exclude them from a property tax reassessment specifically for parent to child transfers.

There are also occasions where an inherited property is owned by a trust rather than in the estate. The process is almost the same. The trust loan is secured by the real estate and the loan proceeds go directly to the trust and then to the beneficiaries who are being paid off for their interest in the property they inherited.