American Riviera Bank is now offering a type of loan to help siblings better navigate estate planning following the death of a parent.
The trust bridge loan essentially allows one sibling to keep the family home after a parent's death, even if other siblings want to sell the property.
Children who would rather receive a portion of the home’s value in cash can do so through this special type of bridge loan — a term typically used to describe a short-term loan that secures a purchase until longer-term financing is arranged.
American Riviera Bank is one of the only local banks offering the loan, and has already assisted a number of customers confused about how to take a home out of an irrevocable trust, according to Crystal Quintero, the bank’s relationship manager. An irrevocable trust cannot be modified or terminated without the permission of the beneficiary.
“It’s a loan that we make to an irrevocable trust,” Quintero said. “Financial institutions don’t feel comfortable lending to an irrevocable trust. We’ve found that it’s really helped some people.”
So far, patrons have only heard about the trust bridge loan via word of mouth, with some referred by other local institutions or customers privy to the service, which has been available more than a year.
The number of customers requesting this type of financing has doubled in the past year, Quintero told Noozhawk.
She said the new bridge loan comes into play when siblings are faced with the death of their parents, who had owned a home and placed it into a family trust to maintain the same property tax bracket.
American Riviera Bank allows a sibling who wants to keep the house to qualify for a loan, something Quintero said is difficult to do when the home is still part of an irrevocable trust.
Once the trust is dissolved, one sibling puts the home in his or her name and gains practical financing, while the others receive a portion of the home’s value, which is agreed upon ahead of time.
Quintero said the process could take weeks or months, depending on the wishes of siblings and the shuffling of paperwork.
“We take the time to make sure everyone is on the same page,” she said. “It’s really a good thing for people to think about with estate planning. Sometimes they don’t realize that option is out there.
“We’re small enough and new enough that we can do things that are a bit different," she continued. "We have more flexibility to work with people. We realized that there was a need for this in our community.”
Quintero encouraged those with questions about the trust bridge loan process to call 805.965.5942 to set up an appointment or to drop by one of American Riviera’s two branch locations in downtown Santa Barbara, at 1033 Anacapa St., or Montecito's Upper Village, at 525 San Ysidro Road.