A: There are three main options for California property owners that have low property tax bases who want to leave the properties to their children.
1: Do nothing. This allows your children to inherit the property and receive a stepped-up basis as of the date of death of the last surviving parent. Ideally, properties should pass to children through a living trust.
2: Deed the properties to your children before February 15, 2021. This allows the existing property tax base to be transferred to your children BUT has the downside of also transferring low-cost-basis to your children, which would trigger potential capital gains taxes owed by your children if/when that property were sold in the future.
3: Use a specialized irrevocable trust to transfer property before February 15, 2021. The trust is drafted in a way to allow the County Assessor to consider it a transfer for purposes of transferring existing property tax base, AND ALSO to allow the IRS to consider the property to be included in the parents’ estates such that the children receive a stepped-up basis as of the date of death of the last surviving parent.
Regardless of the decision, if you want to do options 2 or 3, move QUICKLY as time is rapidly running out to take advantage of this opportunity.
If you have any questions about this, please feel free to reach out to us (707-681-5851 or [email protected]) or set up a complimentary consultation at your convenience by clicking on the following link: https://MyNapaLawyer.as.me/