A married California homeowner transfers the family home into an irrevocable trust that names his adult children as the present beneficiaries. Neither he nor his spouse retains any beneficial interest, and the home will not become any child's principal residence. Under Proposition 13, does this transfer trigger a property tax reassessment?
Correct Answer
C) Yes — the present beneficial interest passed to persons other than the trustor and his spouse
A change in ownership is a transfer of a present beneficial interest in real property whose value is substantially equal to the fee (Revenue and Taxation Code §60). Section 62(d) excludes a transfer into trust for as long as the trustor or the trustor's spouse is the present beneficiary, or the trust is revocable, which is why ordinary estate-planning transfers reassess nothing. Here the trust is irrevocable and the children hold the present beneficial interest, so beneficial ownership has left the trustor and the assessor reappraises the home at current market value. The Proposition 19 parent-child exclusion does not rescue it, because that exclusion reaches a family home only when the child makes it their principal residence and a timely claim is filed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A variance is an authorized deviation from the existing zoning ordinance granted to a property owner who demonstrates unique hardship. It allows a use or structure that would otherwise violate the current zoning rules.
Wetlands protection refers to federal and state regulations that restrict development on wetlands — areas where water covers the soil or is near the surface for part of the year. The primary federal authority is the Clean Water Act enforced by the Army Corps of Engineers.
Zoning is the government's division of land into districts with specific permitted uses such as residential, commercial, industrial, or agricultural. It is the most common exercise of police power over private property.
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