How does Proposition 19 affect my estate plan?

Hi, and welcome to this week’s Question of the Week. My name is Marc Herbert and I’m the founder of Herbert Law Office. Every week I’ll be here with one of our most common questions, and one of the most frequent questions I’ve been getting asked lately is how does Proposition 19 affect my estate plan? While Proposition 19 was passed by the voters in California last November, and it really does affect how we do transfers to non spouses. It is going to have a major impact in that most of our Proposition 13 protections, back when we first bought our land, are going to be erased if we try to do a transfer to a non spouse. Usually our children under certain circumstances. So it’s kind of a mixed blessing for those of us over 55 years old who are buying new land. We’ll be able to save a lot of property taxes for ourselves.

The big problem is going to be if we transfer assets to a non spouse who’s under 55 years old, if you do the transfer the wrong way, the transferee the child is going to end up paying basically triple property taxes. From what you had experienced yourself. So that’s a potential massive property tax that essentially wipes out the protections of Proposition 13. There are some exemptions that are available. If the non spouse moves into the property and uses that as a primary residence. They would not be subject to Proposition 19 if they were disabled, if they were a victim of a wildfire. They would be exempt from Proposition 19. But if you don’t have an estate plan, you have no protection from this massive tax increase.

For transfers to children under 55 years old. If you have an estate plan that was drafted before November of 2020, chances are your current estate plan does not protect your loved ones either. So what needs to happen is if you don’t have an estate plan, you need to get one soon. First of all, if you don’t even have a plan, your loved ones could be stuck in probate court where they’ll spend two or three years in court. You’ll lose about 7% on average of your assets going through court. And then once they get out of court, they’re going to be subject to taxes, including Proposition 19. So either way, it’s a good time to check into your documents, make sure they still work for you, Your specific family structure, your specific assets structure, your specific goals. So if you have any questions about the information contained here, feel free to click the link below to schedule a 15 minute phone appointment or just give us a call at 6612739007.

If you have a family member or friend who may find this information helpful, feel free to forward this along. Thanks a lot. And be sure to tune in next week.