Death and Taxes!!! Can’t escape them!
I have a question regarding a Change in Ownership Statement on Death. Our client, now deceased, had property interests held in limited partnerships. Do we have to file? Is it required for a Change in Ownership on Death to be filed? Or is it required only if the property is held in a person’s name or in a trust?
If the death of a member of an LLC or a partner of a partnership changes the control of the entity by 50% or more, according to the California Revenue and Taxation code section, it will be construed as a change in ownership of that legal entity. If that is the case, the BOE 100-B will need to be completed and there may be a reassessment of property taxes on the properties that are affected by the death of a member.
Here is a link to the website that will give you the form and the filing requirements – https://www.boe.ca.gov/proptaxes/pdf/boe100b.pdf
I am a Successor Trustee of a Trust and I sold a property through you about 4 months ago. I was just sent a supplemental tax bill for a few thousand dollars! Is this a mistake and should it have been sent to the Buyer? It has the name of the Trust on it, not the Buyer’s name.
In order to answer your question, please look at the supplement bill. In the middle of the form, there should be a “Special Information” box or a statement to tell you why this supplemental bill was generated. What does it say?
“This supplemental assessment reflects the increase in your property taxes due to change of ownership occurring on April 22, 2019”.
Here is what we believe happened: In your escrow, we filed an Affidavit of Death of Trustee when we closed. Normally, this Affidavit is supposed to be filed by you as the Successor Trustee within 150 days from the date of the death of the original remaining Trustee together with a Change in Ownership Statement on Death form. That was not filed so we had to do so at close of escrow.
The Assessor’s office saw the recorded Affidavit of Death and, based on the Death Certificate that is attached to it, determined that the death of the owner occurred on April 22, 2019. So they reassessed the property based on what they think the value was 3 years ago and are charging you the supplemental taxes retroactively from when the date the Trustee passed away, to the date we closed escrow on your sale to the new Buyer. This supplemental tax is the responsibility of the Trust and so it was sent to the last known address of the Trust.
I am sorry, sooner or later the Assessor would have reassessed the values. If this had been done 3 years ago, the yearly property tax assessment would have been higher for each of the next 3 years. But they would not have charged you the penalties for non/late filing as they did now with this bill.
The client was not too happy.
The change of ownership filing due to the death of a member of a corporate entity is a rare question and we are happy that it provides for an educational moment that we can share.
The reassessment of property taxes due to the death of a trustee is a very common question and we are happy to share that, too, with a rather long answer.
Surprise! The government wants its money. The code says that if there is a transfer of ownership, the CA Assessors are to re-assess the property, unless there are special circumstances (like less than 50% of a corporate entity, or a transfer between parents and children, etc.) Unfortunately, the general public may not know the regulatory laws and so may be caught by surprise when the government comes after them.
Tip #1 for today – If you received a notification from a government agency, please open it and review the content. Unlike ads and throw away mail, government agencies do not send out mail to consumers unless it is important!
Tip #2 – When it comes to taxes, you can first check with your escrow officer who did the transaction. But, there is only so much the escrow officer can look up and explain so if you are still concerned, go straight to the horse’s mouth – call the Assessor or Tax Collector’s office directly.
~ Video of the Month ~
For the holiday season, another great Neal Foard video on the virtues of “Patience”
~ Quotes of the Month ~
As the midterms are over, here are some quotes that we can laugh at:
~Politics is supposed to be the second-oldest profession. I have come to realize that it bears a very close resemblance to the first. (Ronald Reagan)~
~Politics: [Poly “many” + tics “blood-sucking parasites”] (Larry Hardiman)~
~Politicians are the same all over. They promise to build a bridge even where there is no river. (Nikita Khrushchev)~
My YouTube Offering for the Month
Escrow Tip #17 – Hold on to that proof of loan payoff!
You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
The opinions expressed in this blog are solely the author’s.
Your comments and viewpoints are always welcome.
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