How to Prepare for Inheriting Property or Passing It Down

Inheriting a property is usually a blessing, but it comes with responsibility. It's essential to understand the steps involved and the implications. Our team of seasoned Southern California REALTORS have seen it all, and are here to help. Here, we'll break down the key points to consider when facing this situation.

1. Understand the Legal Framework:

When inheriting property, it's crucial to know the legal aspects involved. One significant consideration is whether the property is held in a living trust. A living trust can help minimize taxes and simplify the transfer process.

2. Tax Implications and Proposition 19:

In California, Proposition 19 has changed the rules regarding property tax reassessment upon inheritance. Now, family members must live in the inherited property to maintain the original property tax rate. Failure to do so could result in a reassessment at current market value, leading to potentially higher taxes.

• PROP 19 ON INHERITING PROPERTY
  ”Proposition 19, or the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parents ONLY if the property is the principal residence of the parents and the child or children make it their principal residence within one year.” (Los Angeles County Assessor)

• PROP 19 ON TRANSFERRING YOUR PROPERTY TAX BASE

  “The other component of Proposition 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times (or once per disaster). The tax base may be transferred to a property located anywhere in the state.” (Los Angeles County Assessor)

3. Consult with a Trust Attorney:

Working with a trust attorney is essential to make sure that all legal matters are handled correctly. While setting up a trust may involve some costs, the benefits often outweigh the expenses. Trust attorneys can provide guidance on structuring the trust to minimize taxes and streamline the inheritance process.

If you do not set up a trust, your property will have to go through probate (The process of deciding if a will exists and is valid), which can take time and frankly makes the process much more complicated than it needs to be. Setting up a trust is the best way for you to avoid this headache.

Do not only consult with your real estate agent, also seek assistance from an attorney for legal matters.

4. Plan Beyond Property:

Inheritance involves more than just real estate. It's essential to address all aspects of the estate, including personal property and final arrangements. Making final preparations is a gift to your loved ones so they don’t have to guess what you would have wanted.

5. Communication and Family Dynamics:

Open communication among family members is crucial during the inheritance process. Clearly outlining intentions regarding property and personal belongings can help prevent misunderstandings and conflicts down the line. By being proactive and transparent, families can preserve relationships during an emotionally challenging time.

6. Work with a Qualified Real Estate Professional:

Navigating the complexities of inherited property requires expertise and experience. Working with a qualified real estate professional who understands your market can provide invaluable support throughout the process. Whether you're selling, renting, or managing the property, a knowledgeable agent can help you maximize your investment and achieve your goals.

Our team at Century 21 Marty Rodriguez has been assisting in transferring homes to your loved ones since 1978, and we’re here to help. Let us know if you have any questions that we can answer, no strings attached. We’re here for you.

Did you know? You can book a quick 15 minute consultation where we can answer any questions you may have over the phone. Find a time that works for you here.

CONCLUSION

Inheriting property is a significant life event that requires careful planning and consideration. By understanding the legal requirements, consulting with professionals, and fostering open communication within the family, individuals can navigate the inheritance process with greater ease and confidence. In Glendora and throughout Southern California, being well-informed about these matters can make all the difference in preserving both financial assets and familial relationships.