[WSBAPT] Commercial Loan Due-on-Sale at Death

[Jennifer Sohn]

I have a similar situation where an LLC member guaranteed a commercial
loan, and the death of any guarantor constitutes default. (LLC is owned by
H&W and both H & W guaranteed the loan). The client is in his 80s and is
planning on purchasing life insurance to pay off the loan after he passes,
and came to me to set up an ILIT... Any thoughts?

Thanks,

Jennifer

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On Tue, May 9, 2017 at 7:14 AM, Paul Grant <paulnnepa at gmail.com> wrote:

> A client passed away with a commercial building and there is a loan
> attached to it.  The loan was taken in the name of the LLC and was not
> personally guaranteed by the decedent or the surviving spouse.  The terms
> of the loan clearly state that the death of any member is a default.
>
> Has anyone seen a commercial loan, if being timely paid, trigger the
> default provision and demand the loan to be paid in full at the death of a
> member?  I have a hard time believing that they would recall the loan if it
> is currently paid, but sometimes commercial loans are a different creature
> and do things that make no sense.
>
> The surviving spouse is living in terror that the bank is going to demand
> the loan to be paid and I have no experience in dealing with commercial
> loans to help calm her.  Thoughts on commercial loans and any suggestions
> on the next step - I really don't want to be surprised.
>
> Thanks!
>
> Paul H. Grant - JD, LL.M
>
> Planning with Purpose, Inc
> Lynnwood, WA 98036
> 425-939-9948 <(425)%20939-9948>
> www.planningwithpurposeinc.com
>
> Estate Planning. Business Planning. Wealth Succession.
>
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-- 

Best regards,



Jennifer Y. Sohn

Attorney at Law

(Licensed in CA and WA)

Sohn Law PLLC

10900 NE 4th Street, Suite 1850

Bellevue, WA 98004

Tel: 425.522.3861

Fax: 425.732.9748

Email: jennifer at sohn-law.com

http://www.sohn-law.com



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