Laws, Regulations & Annotations

C

220.0000 CHANGE IN OWNERSHIP

Annotation 220.0766.005

220.0766.005 Trusts. A transfer of property to a trust where the present beneficiary has an income interest for a term less than 35 years is not a change in ownership of that property unless the trust to which the property is transferred qualifies as a "Clifford Trust" and the property does not revert to the grantor within 12 years as required by Revenue and Taxation Code section 62(d). Clifford Trusts are irrevocable, but temporary, trusts created primarily for income tax planning purposes, whereby income from the trust property is paid to the beneficiary and taxed to the beneficiary, but the property itself reverts back to the settlor when the trust expires. However, where the transfer of an income interest is to a trust that is not a Clifford Trust, the transfer would be analyzed according to the estate for years rule as set forth in Property Tax Rule 462.060(b). Rule 462.060(b) provides that the creation or transfer of an estate for years for less than 35 years is not a change in ownership, while an estate for years for a term of 35 years or more in real property is a change in ownership at the time of transfer (unless the instrument creating the estate for years reserves such estate in the transferor or the transferor's spouse, or registered domestic partner). C 1/28/2015.