New Prop. 19 Altered Inheritance Rules by Jane McNamara, Estate Planning Attorney

Proposition 19 was approved by the California voters in the November 2020 election, and became effective in February 2021. Although some will experience benefits from the new law, many people will experience a negative impact, since the new law limits the “parent-child” exclusion that was so beneficial to children inheriting their parents’ real estate.
Prior to Prop 19, children could inherit their parents’ primary residence and other real property, up to 1 million dollars, without reassessment or increase in property taxes. As most parents had low property taxes due to Prop. 13, children would inherit their parent’s home, and often choose to rent the house for income, as the property taxes were affordable.
However, under the new law, children who inherit real property from their parents will see a fair market reappraisal by the county assessor’s office, and very likely be shocked at their new property tax bill. Our office has seen this new law affect the inheriting child’s decision to keep or sell the real property.
There is an exception: the inheriting child must live in the inherited home as their principal residence within one year, or the property will be reassessed at its full fair market value. If two children inherit the home and one has wishes to live there, then one-half of the property will be reassessed.
The new rules are complex, and there is little guidance. But one thing is certain: there are many changes affecting children’s inheritances (the Secure Act re: IRA’s, Prop. 19, Clark v. Rameker where inherited IRA’s are not protected from creditors, etc.). To properly protect your family, consider a new or updated estate plan.
For an appointment, please contact the McNamara Law Firm at (661) 287-3260, or visit www.theMcNamaraLawFirm.com.