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Hi, this is Keith Davidson from Albertson & Davidson. In this video, we’re discussing real property taxes. When a person passes away and they transfer assets, real property, from themselves to their children, under California law, the children are allowed to file a parent to child exclusion. And what that does, it prevents the house or the real property from being reappraised for real property tax purposes. And that can be a real benefit to the child. If the parent bought the house many years ago, the tax valuation for real property tax purposes might be very low. Whereas, if you were to reappraise the property at current values, the value would be much higher and resulting in more property tax rather than less property tax the way the parent had it.
So that property tax basis, that appraised value that they used to determine the amount of tax, it can remain intact if property passes from parents to children. But you have to file the proper exclusion form. And the question is does the trustee have the responsibility for filing that form and that all depends. It depends on the type of trust that you’re dealing with and how long these assets are going to remain in trust.
So the property is supposed to pass out quickly to the beneficiary and it happens in a manner of a few months, but it might be the responsibility of the beneficiary to file the parent to child exclusion. If, however, the property is going to be held in trust for a significant amount of time, then the trustee would have the obligation to file that parent to child exclusion. So it really depends on the facts and circumstances of your case as to who has the responsibility for filing the exclusion.
But the thing you should and always remember is that if you’re receiving real property from your parent, be sure that some way, somehow, somebody files the parent to child exclusion.