The question of whether transferring real estate into a trust triggers a property tax reassessment is a common concern for property owners in California, and specifically relevant to the work Steve Bliss does as an estate planning attorney in San Diego. Generally, the answer is no, a properly structured transfer to a *revocable* living trust does not trigger a reassessment under Proposition 13, but there are very specific rules that must be followed. Proposition 13, passed in 1978, limits property tax increases, and transfers between certain types of trusts are explicitly excluded from reassessment. However, failing to adhere to these rules can unintentionally create a taxable event, potentially leading to significant tax increases. It’s crucial to understand that the trust must be revocable, meaning the grantor (the person creating the trust) retains control and can amend or terminate it, and the transfer must not involve a change in beneficial ownership.
What are the requirements for avoiding reassessment?
To avoid property tax reassessment when transferring real estate into a trust, several conditions must be met. First, the trust must be a revocable living trust, allowing the grantor to maintain control over the property. Secondly, the grantor, their spouse, or registered domestic partner must be the sole beneficiaries of the trust during their lifetime. This ensures no change in beneficial ownership occurs. According to the California State Board of Equalization, approximately 75% of California property owners could benefit from using a revocable living trust to avoid probate, but many unknowingly jeopardize that benefit through improper transfer procedures. The transfer must also be completed without any consideration—meaning no money or other valuable items are exchanged. A key point is that the transfer must be reported to the county assessor using a Preliminary Change of Ownership Report (PCOR) even if no reassessment is expected, demonstrating transparency and adherence to the law.
What happens if the transfer isn’t done correctly?
I remember working with a gentleman named Mr. Henderson, a retired teacher who had meticulously planned his estate. He’d created a trust, but in his eagerness to complete the transfer, he inadvertently listed his daughter as a co-trustee *and* beneficiary while he was still alive. This seemingly minor oversight triggered a reassessment by the county assessor, as it was deemed a transfer of partial ownership. The assessed value of his beachfront property jumped significantly, costing him thousands of dollars annually in increased property taxes. This situation underscores the importance of precise execution and expert guidance; a seemingly harmless action can have substantial financial consequences. Roughly 10-15% of initial trust transfers we review have similar issues that require correction, highlighting the need for careful planning and review.
How can a trust transfer actually save you money?
Contrast Mr. Henderson’s experience with Mrs. Alvarez, a local business owner who came to Steve Bliss for estate planning assistance. She was concerned about the potential for probate and the associated costs and delays. We carefully structured her trust and oversaw the transfer of her commercial property, ensuring all requirements for maintaining the current assessed value were met. Beyond avoiding probate, her trust allowed for a seamless transfer of ownership to her children upon her passing, avoiding years of legal battles and potential family disputes. The peace of mind she gained, coupled with the potential savings on probate fees (often 5-7% of the estate value), was invaluable. In California, probate can take anywhere from six months to several years, with costs escalating rapidly. Properly utilizing a revocable living trust can circumvent these issues entirely.
What should I do before transferring property into a trust?
Before transferring any real estate property into a trust, it is imperative to consult with an experienced estate planning attorney, like Steve Bliss, who is knowledgeable about California property tax laws. An attorney can review your specific circumstances, ensure the trust is properly drafted, and guide you through the transfer process to avoid any unintended consequences. They can also assist with completing the necessary paperwork, such as the Preliminary Change of Ownership Report, and ensure it is filed correctly with the county assessor. Remember, proactive legal counsel is a worthwhile investment that can protect your assets and provide peace of mind. Don’t risk a costly mistake; seek expert advice to navigate the complexities of California property tax laws and estate planning.
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About Steve Bliss Esq. at The Law Firm of Steven F. Bliss Esq.:
The Law Firm of Steven F. Bliss Esq. is Temecula Probate Law. The Law Firm Of Steven F. Bliss Esq. is a Temecula Estate Planning Attorney. Steve Bliss is an experienced probate attorney. Steve Bliss is an Estate Planning Lawyer. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Steve Bliss Law. Our probate attorney will probate the estate. Attorney probate at Steve Bliss Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Steve Bliss Law will petition to open probate for you. Don’t go through a costly probate. Call Steve Bliss Law Today for estate planning, trusts and probate.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
irrevocable trust
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RL4LUmGoyQQDpNUy9
Address:
The Law Firm of Steven F. Bliss Esq.43920 Margarita Rd ste f, Temecula, CA 92592
(951) 223-7000
Feel free to ask Attorney Steve Bliss about: “What happens if I die without a will?”
Or “What is summary probate and when does it apply?”
or “Do my beneficiaries have to do anything when I die?
or even: “Can bankruptcy eliminate credit card debt?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.