Laws, Regulations & Annotations

P

625.0000 PARENT-CHILD TRANSFER

Annotation 625.0215

625.0215 Trusts. Joint tenants, father and daughter, propose to transfer their interests in a residence to a pre-existing testamentary trust, in which father is the sole income beneficiary for his life and daughter and son are equal remainderpersons. The transfer of father's interest would be excluded from change in ownership under Revenue and Taxation Code section 62(d), and the transfer of daughter's interest would be excluded under Revenue and Taxation Code section 63.1, providing the parent-child claim is timely filed and all requirements are met. Upon father's death, his life estate will terminate, resulting in a change in ownership. The transfer of his 50 percent interest in the trust property to daughter and son could be excludable under section 63.1, the transfer of daughter's 50 percent interest in the trust property to her brother and herself would not be excludable.

If, as an alternative, father purchases daughter's 50 percent interest in the residence, files a parent-child claim, and then transfers that interest together with his own 50 percent interest into the trust, each step would be excludable under section 63.1 and Revenue and Taxation Code section 62(d) respectively. The step transaction doctrine would not be applicable, despite the extra steps, because of the uncodified statement of legislative intent at the end of section 63.1. C 5/27/1993.