CASWELL BELL & HILLISON LLP
FRESNO, CALIFORNIA

PROPERTY TAX REASSESSMENT AFTER DEATH

Because of Proposition 13, many counties in California face ongoing shortages in funding.  As a result, county tax assessors may take aggressive positions to collect additional property tax revenue.

Real property is subject to reassessment upon a “change in ownership.”  However, certain transfers are excluded, including a transfer between spouses and a transfer from parents to children (or grandchildren).

When a probate estate is opened, the county tax assessor requests that the executor file a “Preliminary Change of Ownership” form so that the property can be reassessed.  Such reassessment can include “escape assessments,” meant to recover taxes from prior periods. 

The county assessor will want to reassess the property at current fair market value from the date of death.  However, when property passes to a spouse or child, the transfer is not subject to reassessment under the laws of the state of California and the rules and regulations promulgated by the State Board of Equalization.

The Preliminary Change of Ownership form is a standardized form, and does not easily fit to probate administration.  However, the Property Tax Law Guide published by the California Board of Equalization explains as follows:

• “220.0260  Inheritance.  Except for transfers which take effect upon the death of a spouse, there is a change in ownership upon the date of death of an individual. When there has been a delay in the assessor’s discovery of an individual’s death, an escape assessment levied against the heir or heirs is proper.  C 5/13/82.
   
• “625.0090  Inheritance.  A testamentary transfer to a child by a parent was held by the court in Larson v. Duca (1989) 213 Ca1.App.3d. 324 to have occurred on the date of distribution of the estate rather than on the date of death for purposes of applying the parent/child exclusion from change in ownership.  This was contrary to an opinion issued by Board staff based upon Probate Code section 300.  Subsequently, Revenue and Taxation Code section 63.1(c)(1) was amended to provide that as of January 1, 1993, transfers between parents and their children under will or by intestate succession are, for change in ownership purposes, made as of the date of the decedent’s death, if the decedent died on or after November 6, 1986.  C 7/10/87.”

Pursuant to these authorities, a change of ownership occurs on the date of death of the decedent.  If the transfer is made to the surviving spouse and/or the children of the decedent, the transfer is not a “change in ownership” which is subject to reassessment.  You should make an attachment to the Preliminary Change of Ownership form to explain the situation, and  mark the property as exempt from reassessment.  Otherwise, the tax assessor will levy additional taxes, because of the probate administration of the estate. 

© Caswell Bell & Hillison LLP          Attorneys and Lawyers, Fresno, California