Tuesday, May 31, 2011

Important But Overlooked Property Tax Exemptions

In last month’s blog entry, we discussed how property taxes are an important, and often overlooked, consideration in estate planning and estate administration in California. Many people don’t realize there’s a problem until they receive a large property tax bill indicating that their property has been reassessed for property tax purposes. In last month’s blog entry we discussed how property taxes work and why you should not transfer any interest in your real property without consulting an attorney first. Here are some of the questions we commonly receive regarding property taxes and the administration of an estate:

Will a property be reassessed upon the death of the owner?

Yes. Under California law, death of the owner is considered a change in ownership and the property can be reassessed as of the date of death for property tax purposes.

What about if the property was held in a trust? Is it still subject to reassessment?

Yes. A change in ownership occurs upon the date of death of the owner of the property, also referred to as the trustor, or lifetime beneficiary of the trust. The change in ownership and, if applicable, the date of reassessment, is the date of death the property owner, not the date of distribution to the successor beneficiary of the trust.

Will the property be reassessed if it passes to the decedent’s children?

Yes. However, if all or some of the property is passing to the decedent’s child(ren), the decedent’s child(ren) may qualify for a reassessment exclusion. In order to qualify, a Claim for Reassessment Exclusion Between Parent and Child must be filed with the Assessor’s Office within three years after the date of transfer, or prior to transfer to a third party, whichever is earlier, or within 6 months after the mailing of the notice of supplemental or escape assessment.

If the above time requirements have expired, and the property has not been transferred to a third party, a claim can still be filed, however, the exclusion will only apply to future tax years.

What about property passing to a grandchild?
Property passing to a grandchild may be exempt from reassessment if all the parents of the grandchild that qualify as a child of the deceased property owner are deceased. A Claim for Reassessment Exclusion Between Grandparent and Grandchild must be filed with the Assessor’s Office in a timely manner in order to qualify for reassessment exclusion.

San Diego Estate Planning, Probate and Trust Administration
If you have any questions regarding property tax reassessment, or need assistance with the administration of a trust or estate, contact the Casiano Law Firm for experienced advice and representation.