URGENT PROP 19 PLANNING
YOU NEED TO USE MOST OF YOUR PARENT-CHILD EXCLUSIONS FROM PROPERTY TAX BEFORE FEBUARY 16, 2021, OR THEY WILL BE LOST!
For most property owners, there are NO SIMPLE ANSWERS to dealing with Prop. 19 without "side effects" on other tax or personal considerations.
I am SWAMPED with inquiries. I wish I had time to talk to everyone because I truly enjoy speaking to AOA members. Unfortunately, if I take the time to explain the ins and outs of dealing with Prop 19 to everyone, none of the work that I have committed to clients will get done! BUT, I CAN DO CONSULTATIONS FOR A LIMITED NUMBER OF CLIENTS to help them determine what steps they may want to take to protect their property from reassessment when it passes to children.
Almost any answer to just the Prop 19 issues involves tradeoffs between: (i) property tax benefits; (ii) estate/gift tax benefits (which are likely to be more meaningful given threatened tax reforms); (iii) income tax consequences (usually involving the step-up in basis which the Dems are threatening to abolish anyway, while even Trump proposed abolishing it in 2016!),; AND (iv) an owner's need to maintain cash flow and some level of access to his/her/their wealth while alive.
So, doing this kind of planning is a bit like trying to play a four-dimensional chess game without being sure what the rules of the game will be by the time the game ends.
The good thing, however, is that we can usually come up with a strategy that will optimize all of these “dimensions,” though clients will often need to choose between (a) trying to get step-ups in basis even though they may not survive as long as clients expect to live, or (b) trying to minimize estate taxes.
I do offer personalized consults, but cannot do them for free. A consult will usually discuss integrating strategies for dealing with Prop 19, as well as estate tax exposure, step-ups in basis on death and maintaining access to wealth (for those clients for whom it may be relevant).
IF you want a personalized consult, I need to get from you a completed questionnaire and real estate schedule (pick the format that works best for you), plus your living trust. I expect to spend about an hour analyzing what you send, and then do a 2 hour consult by phone or Zoom videoconference. Contact me or my wife Hinda (phone 818-988-0949, or email ) to request these forms and set up a date and time for a personalize consult.
To justify taking time away from work for other clients, I charge $2,700 for such a consult. This makes sense only if you have a large enough estate to justify the $2700 charge for my time. If reassessment after you die would cost your children $30-40,000 per year (that would mean, after growth in values, your real estate would be worth at least $2.5 million more than assessed value), the potential property tax savings of planning that just optimizes use of the parent-child exclusion from reassessment before Feb. 16 can likely save them a million dollars over their lifetimes. That sounds like enough to make the planning worth doing.
Depending on your situation, income or estate tax savings can add millions more.
While you can solve the property tax risk just by giving property to children before Feb. 15, that does not deal with planning for the other ”dimensions.” Implementing strategies to deal with the other dimensions can cost $15,000 if you do not think you need additional estate tax savings, and more if estate tax savings are relevant. Even though that is not cheap, it may be worth it if it can save millions for your children (and will usually give them protection from other non-tax risks).
The consult should help you decide on your next "chess moves" and how to balance your planning over all four dimensions Some clients like to have their adult children, CPA or other advisers participate in the consult to help the clients make decisions and understand issues. I have no problem with that approach, though it may negate the attorney-client privilege that would otherwise attach to the consult.
If you want to schedule a paid consult, please contact my wife, Hinda, at this office and email or fax to me a completed Worksheet (use the PDF or Word form), RE Schedule (PDF or Excel) which we can provide, and a copy of your living trust.
Otherwise, I hope I can give you some guidance in the Apartment Owner’s Association Livestream on January 7 @ 11 AM. You can register at:
E-mail me at
or call 818-988-0949 for more information or to get a copy of the Worksheet and RE Schedule I would need to do a meaningful consultation. BUT, do not wait too long; planning takes time to complete. To preserve parent-child exclusions from property tax reassessment, most transfers need to be completed by February 15, 2021