Laws, Regulations & Annotations

C

220.0000 CHANGE IN OWNERSHIP

Annotation 220.0197.005

220.0197.005 Estate for Years. A trust provides that upon Husband's death, the property remains in the trust for Wife's benefit for 18 months, after which the trust directs the trustee to sell the property and distribute the proceeds to remainder beneficiaries: Wife, two daughters, and three grandsons. Pursuant to Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, the entirety of Husband's interest in the property was transferred at his death, even if the interest is divided between an estate for years to Wife and the remainder interest to the remainder beneficiaries. As such, the property underwent a change in ownership at Husband's death.

Pursuant to Property Tax Rule 462.060(b), which provides that the creation or transfer of an estate for years for less than 35 years is not a change in ownership, Wife did not receive the fee equivalent interest upon Husband's death. Therefore, necessarily, it is the remainder beneficiaries who receive the fee equivalent interest. Thus, the remainder beneficiaries should be deemed partial owners in relation to their respective interests in the proceeds. Pursuant to Property Tax Rule 462.260(d)(1), the date of change in ownership is the date at which the trust becomes irrevocable (Husband's date of death). The percent interest transferred to Wife, as a remainder beneficiary, is excluded from change in ownership, pursuant to the interspousal exclusion. The parent-child exclusion is available for the percent interest transferred to each of Husband's daughters, assuming all other requirements are met. The percent interest transferred to Husband's grandchildren does not qualify for the grandparent-grandchild exclusion, as the parents of the grandchildren were not deceased on the date of Husband's death. C 12/5/2014.