Mark W. Bidwell, Attorney at Law
California real property transfers from deceased parent to child require change in trustee, change in ownership and exclusion claim from increased property taxes
Irvine, California (PRWEB) September 18, 2014
Mark W. Bidwell through website DeedAndRecord, transfers real estate out of a deceased parents trust in three steps. First is change trustee. Second is transfer of ownership from trust to child. Third is a claim exclusion to prevent increase in property taxes.
Two documents are needed to transfer real property in California out of a deceased parent’s trust, a deed and an affidavit. Distribution of real property to a child of a deceased parent qualifies for Proposition 13 property tax exclusion. To obtain the exclusion a third document, ‘Claim for Reassessment Exclusion for Transfer between Parent and Child’ is required.
The affidavit is a declaration, under oath, by the successor trustee of the trust. The successor trustee declares the parent has died and attaches a certified copy of the death certificate. The successor trustee further declares he or she is authorized to take control of the real estate property according to the terms of the trust.
The affidavit death of trustee is filed with the county recorder. Filing puts the public on notice the successor trustee has the authority to take control of the real property. Control is limited to what is directed by the trust. Typically, the trust directs the successor trustee to transfer ownership of trust assets to children of the deceased parent.
The successor trustee transfers real property out of the trust by deed. A deed is an eight and one-half by eleven inch paper. The format and contents of the deed are mandated by California law. The deed is signed by the successor trustee. There are warranty deeds, grants deeds and quit claim deeds. Warranty deeds and grant deeds warrant good title and an accurate status of debt and liens on the property.
A quit claim deed does not contain any implied warranties. The successor trustee who “quit claims” real estate simple conveys whatever ownership interest the trust has along with any debt or loans secured by the property. The successor trustee makes no promises and the property is taken “as is.”
Any deed transferring ownership incurs documentary transfer tax unless there is an exemption. California Revenue and Taxation Code Section 11930 exempts transfers due to death. To obtain the exemption the deed must state under penalty of perjury the exemption to avoid the documentary tax.
Any change in ownership of real property increases the base for property tax. Transfers due to death are increased to the market value as of date of death. California excludes the first $1 million plus the principal residence of the parents in parent-child transfers. A ‘Claim for Reassessment Exclusion for Transfer between Parent and Child’ must be filed within three years after the date of the transfer to obtain this exclusion. By filing the claim the parent’s property tax base for assessment is transferred to the child.
Upon receipt and control of the real property the children should take steps to reduce capital gains taxes in the future. Good practice is to obtain an appraisal on the property as of date of death. The basis to the child is stepped up to the fair market value of the real property. A sale in the future incurs capital tax on the difference between the market value on date of parent’s death and the sales price.
The successor trustee may have additional duties other than the transfer of real property. Successor trustees to a decedent’s trust have the duty to notify, file tax returns, and prepare an accounting. The starting date is when a revocable trust becomes irrevocable (date of death).
This press release is provided by Mark W. Bidwell, a licensed attorney in California. Contact information is 949-474-0961 and Mark(at)DeedandRecord(dot)com. Mr. Bidwell markets through websites, primarily http://www.DeedAndRecord.com. Address is 18831 Von Karman Avenue, Suite 270, Irvine, California 92612.