Posts By: Gene Osofsky

News Flash: On October 5, 2015, Governor Brown signed the End of Life Option Act.  It authorizes “an adult who meets certain qualifications, and who has been determined by his or her attending physician to be suffering from a terminal disease, as defined, to make a request for a drug prescribed …. for the purpose of ending his or her life.” The law sunsets (i.e., it ends) in 2026, unless the Legislature votes to extend it. Meanwhile and before that sunset date, the California Law Revision Commission will study its operation and make a formal recommendation to the Legislature. The Legislature may then vote to extend, modify and/or terminate the law. Alert:  It was just announced that the new law will go into effect June 9, 2016, which is 90 days after the end of the Special Session of the Legislature which ended March 10, 2016.

The full text can be found here:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520162AB15

Governor’s signing message can be found here:

https://www.gov.ca.gov/docs/ABX2_15_Signing_Message.pdf

 

What follows is a discussion that was relevant BEFORE Governor Brown signed the new law.

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Q. I recently read about a young lady from California, who had been diagnosed with terminal brain cancer and had to relocate to Oregon to arrange her own death with dignity. Why did she have to move? I thought each of us had the right to control our own end-of-life decisions?

A. I believe you refer to Brittany Maynard, who was diagnosed with an aggressive brain cancer which began to rob her of cognitive function and subjected her to progressively painful seizures. Her doctors had given her six months to live.  In coming to terms with her decision to die with dignity before the pain became too great to bear, she made a YouTube video and uploaded it to the internet. It quickly went viral, renewing the debate over right-to-die laws.

The reason she had to relocate was to take advantage of Oregon’s “Death with Dignity Act”, which allowed her to obtain physician-prescribed drugs to peacefully end her life at the time and in the manner of her choosing.

By contrast, in California physicians are currently prohibited from prescribing death inducing medications, as doing so is viewed as assisting suicide, which is a crime in this state. So, in California there are limits on our right to control our end-of-life, and I understand your confusion. True, as counselors we do encourage clients to complete an Advanced Health Care Directive and/or a Physician’s Order for Life-Sustaining Treatment (POLST), both of which express the client’s wishes regarding end-of-life care. But California draws a distinction between our right to accept or reject life sustaining medical treatment, on the one hand, and our right to self-administer physician-prescribed lethal drugs, on the other.  We have the right to the former, but not to the latter.

So the question really becomes what is considered to be “medical treatment”.  Under California law, this includes medical procedures and medications, but also includes artificial nutrition and hydration (food and water) as well as palliative, hospice and comfort care including medication for pain. Thus, for example, we can direct the removal of a feeding tube, and instead opt for pain medication and hospice care and thereby allow “nature to take its course”, even if doing so hastens the moment of death.  But we cannot go so far as to ask our doctor to prescribe death inducing drugs.

For most of us, knowing that in California we retain the right to control our end-of-life care by directing the extent to which we want life-sustaining medical treatment (including nutrition, hydration and comfort care), is reason enough for each of us to sign an Advance Healthcare Directive.

Yet, we fall short of the law in states like Oregon, which extends this right further by allowing terminally ill, but mentally competent, patients to actively end their life with physician prescribed drugs. But even in Oregon, the patient — and not the doctor — must self-administer the lethal dose of medication. Ironically, a Gallup Poll has found that about 70% of Americans support allowing physicians to help terminally ill patients end their lives by some “painless means”. A Field Poll in California found similar approval.  Yet, attempts to pass legislation in California to offer this option to dying patients has thus far been defeated by outcries from vocal interest groups.  So, for those exceptional patients like Brittany Maynard, states like Oregon may be a refuge of last resort.

ALERT:  In January, 2015, inspired by the plight of Brittany Maynard, two California lawmakers introduced right-to-die legislation. It is called the End of Life Options Act and is patterned after Oregon’s Death With Dignity Act.  And in February, 2015, a California woman — joined by physicians — filed a lawsuit against the State of California seeking to establish, through the courts, her right to die at home. Stay tuned.

Posts By: Gene Osofsky

Q. If I die without a will, do my assets go to the state?

A.  Generally, no. The state would be the last potential recipient, and then only if your successors or next of kin could not be located. Here is how your assets would be handled:

Joint Tenancy Assets: Assets held in joint tenancy form, such as “John Jones and Mary Jones as Joint Tenants with Right of Survivorship ” (sometimes abbreviated JTWROS, or merely as “joint tenants”) would go to the surviving joint tenant, and this would be the result even if you had a will. If you are the survivor, then they would go as your separate property as noted below.

Beneficiary Assets: Assets titled in a manner which designates specific beneficiaries would go to those beneficiaries.  Examples: Financial accounts with “Pay on Death” or  “Transfer on Death” designations, insurance and annuity policies, and retirement assets such as IRA’s and 401(k) accounts. Again, the named beneficiaries would take even if you had a will.

Other Assets: other assets, including those held in your name, alone, would go to your next of kin under the California law of Intestate Succession.  Dying intestate means dying without a will. In this situation, California law sets out a plan of distribution as follows:

  • Community Property: all would go to your spouse or register domestic partner (“RDP”) if he/she survived you. If you were the survivor, assets would go as your separate property, but subject to the special 15 year rule for a predeceased spouse, as noted below;
  • Separate Property: assets would go to your surviving spouse/RDP and to your children. The allocation would depend upon the number of your children: (1) if you are survived by a spouse/RDP and only one child, they would each split 50/50; (2) if you are survived by a spouse/RDP and two or more children, your surviving spouse/RDP would receive only one-third and the children would divide the remaining two-thirds.
  • The 15 year rule: if you had a former spouse/RDP who died less than 15 years before you, but left his/her own children surviving, then the portion of your estate attributable to your predeceased spouse would go to his/her surviving children.

If none of the above provisions direct distribution of your estate, then the law looks to your family tree: first to your parents if alive, then to your brothers and sisters, then to your nieces and nephews, then to more remote family members in a prescribed order based upon consanguinity. Only if no one in your extended tree can be located, would your assets escheat to the state.

However, this comment is not an invitation to forego making a will or a trust, because you would then give up some advantages that they offer, such as: the right to designate your own beneficiaries, name the overseer of your estate, the ability to do tax planning, protect the inheritance of children from former marriages, create protective trusts for minors or persons on public benefits, provide for your own incapacity and long term care, the option of avoiding probate by creating a Living Trust, and more.  So, do make that will or create a trust. You will likely feel much better for having done so.

Posts By: Gene Osofsky

Q.  My father just died and I have been named as his executor. Are there steps I should take to protect against theft of his identity?

A.  Yes. As disturbing as it may seem, even the identity of the deceased is subject to identity theft.By one estimate, thieves steal the identities of more than 2 million deceased Americans every year.  Part of the reason these thieves are successful is that it can often take up to six months for credit agencies to be notified of his or her death.  In the interim, the identity thieves strike, apply for credit, make purchases, and even access the deceased’s financial accounts.  So, yes, steps can and should be taken immediately after the death of a loved one.  Here is a short list of action steps:

  • Be careful about the kind of information you put in the obituary: avoid putting information that might be used in a credit application, such as date of birth, last address or mother’s maiden name. Thieves read these obituaries precisely to glean that information.
  • Send, via certified mail, certified copies of the decedent’s death certificate to each of the three major credit reporting agencies, namely Equifax, Experian and TransUnion, advising of the decedent’s death. Include a copy of the decedent’s will or trust certification showing that you are the executor or successor trustee charged with handling the decedent’s affairs.  With your letters, furnish the decedent’s full name, date of birth and Social Security number, along with his or her most recent address and date of death.  Most important: request that the credit bureaus put a “deceased – do not issue credit” alert on the deceased’s credit files.
  • Send copies of the death certificate to each bank, insurer, credit card company and other financial institution where the deceased had accounts.
  • Cancel the decedent’s driver’s license by notifying the Department of Motor Vehicles.
  • Continue to monitor the decedent’s credit report for at least a year to make sure that there are no problems. A free copy of the credit report is available annually to executors or trustees, so I would recommend ordering one from each of the separate credit agencies every four months.  To order your free report, go to AnnualCreditReport.com or call 1-877-322-8228. You can opt to either download a copy instantly or receive a printed report in the mail.

By taking these simple steps, you can protect the identity of your loved one and help to ensure the successful administration of his estate.

Posts By: Gene Osofsky

Q.  My wife and I have a Living Trust and related estate planning documents which were prepared some years ago. We were told that we should keep them current.  Do you have any advice in terms of when it is time to update or revise them?

A.  When your trust was prepared, your attorney probably did his or her best to encourage you to plan for normal contingencies, such as by naming backup beneficiaries and successor trustees in the event your first choices predeceased you or became unable to serve. However, none of us can peer into the future and anticipate all events.  The real key to keeping your documents current is to coordinate them with any significant change in your own personal circumstances, and to keep them compliant with any changes in the law.

While certainly not an exclusive list, here is my short list of times when it may be prudent to at least review your trust and related estate planning documents and, where appropriate, seek the guidance of your attorney:

  • When there is a change in family circumstances, such as births, deaths, marriages, divorce
  • At the beginning signs of incapacity
  • When you anticipate the need for long-term care, including the need for a Medi-Cal subsidy to help with the cost
  • When you feel it is time to delegate decision-making powers to your successor trustee
  • When there is a significant change in your assets and net worth
  • When there is a significant change in the tax law that would affect your planning
  • When any of your beneficiaries become disabled and apply for public benefits, such as SSI and/or Medi-Cal.

In terms of Advance Healthcare Directives, HIPAA Privacy Authorizations, and Physician Orders for Life-Sustaining Treatment (“POLST”), I would have a different list.  With these health-related documents, it is important to keep them current so that your physicians know they reflect your current wishes, especially wishes regarding end-of-life care.  With regard to the Health Directive and HIPAA Authorization, I would suggest reaffirming those wishes at least every three years.  You might do so by simply attaching an addendum reaffirming your wishes, dating and signing it and asking two disinterested witnesses to sign.  Regarding the POLST, I would suggest doing the same but with a frequency of at least once a year, and perhaps every six months depending upon your circumstances.  If your agents change addresses and telephone numbers, you might notate their new contact information by way of a dated addendum, rather than by interlineating or writing over their addresses in the original documents.

Generally speaking, I encourage my clients to look at their trust and related documents annually and when any of the above events occur, and to consider a review by their attorney every five years.  Not all reviews will necessitate a change in the plan documents, but the above benchmarks will serve you in good stead should a revision be necessary.

Posts By: Gene Osofsky

Q. Our 90 year-old mother is frail but wishes to remain at home. She has limited financial resources, so my sister is living with her and providing care without pay.  Are there any government programs that might help us hire a caregiver and give my sister some relief?

A. Yes. There are a number of programs, but one that may be of special interest is the In-Home Supportive Services Program (“IHSS”). It is designed for persons of limited financial means who are blind, disabled or over age 65, and who are unable to live safely at home without assistance.  For qualifying individuals, it provides nonmedical services such as meal preparation, cleaning, laundry, bathing, feeding, dressing, grooming, toileting, and monitoring for persons with cognitive impairments who are at risk of injury at home.

It works like this: following an application, an in-home assessment is made by a social worker to determine the number of hours of care needed. This can be up to 195 hours per month for a non-severely impaired applicant and up to 283 hours per month for one who is severely impaired.  Upon approval, the beneficiary then selects and hires a caregiver and the IHSS program pays the worker for the  approved hours per month, currently (in 2021) at the rate of $15.75 per hour in Alameda County, $15.00 per hour in Contra Costa County, and $17.50 per hour in San Francisco County.

Resource Limits:  The program is designed for persons of very modest resources who are eligible to receive Supplemental Security Income (“SSI”) or Medi-Cal.  To qualify, the applicant must generally have less than $2,000 in savings if single, and less than $3,000 if married.  Note:  for those persons with excess assets, there may be lawful strategies to accelerate eligibility without the need to first spend down the excess. Also, for couples where only one spouse needs care, the Spousal Impoverishment rules may permit the “well spouse” to retain much more in the way of savings or other non-exempt assets.

Income Limits:  For persons with low monthly incomes, the benefit is available without a share of cost (“co-pay”).  However, for persons whose monthly income is above certain levels (currently, in year 2021:  above $1,481 for a single person and $2,004 for a married person), the applicant will have a share of cost that must be paid to the worker before the IHSS program pays the balance.  Thus, the program only works well for persons with low incomes, or persons with great need who are awarded hours close to the maximum.

In many cases, the caregiver may hire a family member, whether a spouse or an adult child.  Also, for the caregiver who works at least 80 hours per month, the program makes healthcare available at a nominal monthly premium, a valuable benefit to the worker.

If your mother qualifies for IHSS, she could hire your sister so she could receive both a modest salary and health insurance.  Also, to give your sister some relief each month, your mother could split care hours, hiring your sister part-time and another caregiver for the balance of approved hours.

To find out more, call the Alameda County Area Agency on Aging at 510-577-1800, or go to www.AlamedaSocialServices.org.

Reference:  See the website of the California State Department of Social Services, especially IHSS rates of pay in different California Counties:

Posts By: Gene Osofsky

Q. Our father appointed me as executor of his estate, and I want to distribute his personal possessions among the four of us children in a way that is fair. Any suggestions as how I might do this?

A. Yes. I assume by your question that your father did not leave any specific direction in his will or in a separate memorandum, and that you are therefore left to your own discretion in handling this task. Here are some suggestions:

  • Draw lots and take turns picking items. Change the order with each round of choosing, so that everybody gets a chance to pick “first”.  Example: since there are 4 of you, the order of choosing personal items would go as follows: 1-2-3-4, 2-3-4-1, 3-4-2-1, 4-1-2-3, and then repeat.
  • Assign each sibling a set of stickers, with each sibling assigned his own color. Ask each to affix his own colored sticker to the items that he wants. If an item only has one sticker on it, it will go to that person; where an item has more than one sticker, you then revert to taking turns, as above.
  • Where possible, make copies. While many personal furnishings are unique, in the case of photographs and videos, copies can be made that are nearly identical to the original.
  • Get appraisals for items of value. This would be a good approach if there are items of particular value among the furnishings; otherwise, the child with the first turn may walk away with the Picasso.  Again, you would take turns, but you would go through several rounds so that everyone ends up with comparable value:  some would get one or two items, while others would receive a greater number, with each sibling walking away with items of roughly equivalent value.  Alternatively, a child getting the most valuable item(s) might pay the others for the excess value in order to establish rough equivalency.
  • Sell items and divide the proceeds. This is a real no-brainer, especially as to items that have no significant emotional value, but may have some resale value.
  • Work with a neutral third-party who can act as a kind of mediator/arbitrator to defuse any strong feelings among siblings. This could be a mutual friend whom everyone respects, or a hired professional.  For professional assistance, contact the National Association of Senior Move Managers (NASMM) at nasmm.org or call 1-877.606.2766.

For more information, a very readable reference entitled “Who Will Get Grandma’s Yellow Pie Plate?”, is available in workbook format through Amazon.com.

For those who are designing their estate plans and wish to give their executors guidance, know that California permits the will-maker to create a dated and signed memorandum, designating the disposition of tangible personal property.  The memorandum can be periodically updated even without redoing the will.  The limitation is that no single item can have a value more than $5000, and the total value of all items listed cannot exceed $25,000.  Thus, where items are likely to increase in value over time, or where values may be disputed, the use of this memorandum is not recommended.

Posts By: Gene Osofsky

Q.  My wife and I are considering annual gifts to our grandchildren to help with their future college expenses. Do you have any suggestions as to the best way to do this?

 A.  Yes. One of the best options is to make annual gifts into a 529 Education Savings Plan, so named for Section 529 of the Internal Revenue Code. A 529 Plan is an education savings plan operated by a state or educational institution, and is designed to help families set aside funds for future college expenses. The funds contributed to such accounts are usually invested in mutual funds and professionally managed to help pay for future college tuition, room and board, or other expenses. Contributing to a 529 plan is usually a better choice than making outright gifts to custodial accounts for your grandchildren, who would then have the legal right to demand the funds when they become adults regardless of whether they then used the funds as you intended.

Here is a list of some of the benefits in setting up and funding a 529 plan:  (1) you retain control and can decide when your grandchildren receive the funds; (2) in most plans, you can even reclaim the funds should you need them for yourself, such as for your own medical or care expenses; (3) the earnings on investments are income tax-free and distributions down the road for your grandchildren’s college costs come out federally tax-free; (4) your contributions reduce the size of your taxable estate; (5) enrollment is simple and plan assets are professionally managed; (6) the plans are flexible: you may change your investment option every year and you have the option, annually, to move your investments to a different state’s program if you feel it is performing better; (7) you can change beneficiaries at any time, so long as the new beneficiary is a member of the original beneficiary’s family; and (8) your  contributions usually do not affect eligibility for financial aid until funds are actually distributed, and then usually only in the following year; thus, if the 529 assets are only used for your grandchild’s last year of college, the distributions would not likely make any difference for financial aid purposes since he will by then have graduated.

However, since you do retain control and the right to reclaim your contributions, the funds in a 529 plan would count as a resource if you needed to apply for a Medi-Cal long-term care subsidy. However, creating a 529 plan has so many other favorable features, that it is well worth considering.

Nearly every state has at least one 529 plan, and you do not need to be a resident of the particular state in order to contribute to its 529 plan. An excellent resource for general information can be found at www.SavingForCollege.com. California’s 529 plan is called ScholarShare, managed by TIAA-CREF. You can create an account at the following site: www.ScholarShare.com or by calling 1-800-544-5248.

Posts By: Gene Osofsky

Q. While shopping for long-term care insurance, I heard something about a special kind of policy that offers asset protection by coordinating with Medi-Cal. Do you know anything about that?

A.  Yes, you refer to the California Long-Term Care Partnership Plan. California was one of the first states in the country to put together a very unique long-term care insurance policy as a kind of partnership among the state, the individual, and selected insurance companies. The  program was designed to encourage individuals to purchase long-term care insurance and thereby shift much of the cost of long-term care away from public benefits programs and on to the individual and his insurance carrier.  The inducement is the offer of a high-quality policy with automatic inflation protection and a corresponding Medi-Cal asset protection feature.  To understand how the policy works, let’s review how Medi-Cal works:

Background: Generally speaking, in order to qualify for a Medi-Cal long-term care subsidy in a nursing facility, single individuals generally cannot have more than $2,000 in savings, and a married couple no more than approximately $120,000. They may also have certain exempt assets, such as a home.  However, if their savings exceed these resource ceilings, they must then generally spend them down on care until they fall below those ceilings.  Only then will they be eligible for a Medi-Cal subsidy.  However, if an individual owns a Partnership Policy, the amount of the policy payout for care expenses increases the insured’s Medi-Cal resource ceiling by that amount, thereby accelerating his eligibility for Medi-Cal and, later, protecting as much in assets from Medi-Cal recovery.

Example:  Jane and Mary are both age 65, each has $175,000 in savings and each owns her own home.  Jane buys a Partnership Policy and Mary buys a Non-Partnership policy. Both policies provide for two years of benefits and both have inflation protection.  At age 85, both need nursing home care and both begin to draw policy benefits.  Because of inflation, the cost of care for those two years has increased to approximately $500,000, of which approximately $450,000 was paid by insurance.  After two years their insurance benefits are exhausted, and both turn to Medi-Cal for help:

Medi-Cal Without “Spend Down”:  Because Jane had purchased a Partnership Policy, she is allowed to keep $450,000 plus the normal $2,000 for a total of $452,000 in resources and immediately qualify for Medi-Cal.  However, because Mary had not purchased a Partnership Policy, Medi-Cal requires that she first spend down her assets to no more than $2,000 before becoming eligible, essentially forcing her to deplete her estate.

Protection From Estate Recovery:  After qualification, both Jane and Mary continue to receive a Medi-Cal subsidy for the rest of their lives.  At their deaths, Medi-Cal files a claim against Mary’s estate to recover benefits paid, and the recovery claim eats up most of her estate.  However, because Jane had purchased a Partnership Policy, her estate is protected up to the amount of $450,000, the amount of her policy payout, allowing Jane to leave most of her estate to her designated beneficiaries free of any Medi-Cal recovery claim.

For those considering the purchase of long-term care insurance, it makes sense to consider a Partnership Plan Policy. With advance planning, it can be a viable alternative to Medi-Cal planning in a crisis. For more information, visit www.RUReadyCA.org. For free counseling, contact  HICAP at 510-839-0393 (Alameda County) or 1-800-434-0222 (Statewide) and ask for a Long Term Care HICAP Counselor.

Posts By: Gene Osofsky

Q. My mom owned her home for 35 years before she recently passed. Her trust leaves it 50-50 to my brother and me.  I would like to keep the home by purchasing my brother’s interest for cash, and he is okay with that.  Is there a way that we can do this without triggering a property tax reassessment?

A. Yes there is! This is called a Non Pro Rata distribution.  To make it work, the transaction must be handled in a special way.

Background: Proposition 13, which California voters passed in the 1970’s to hold the line on property taxes, nevertheless allowed the County Assessor to reassess property whenever there is a “change in ownership”.  Proposition 58, which the voters adopted later, provides that a transfer of a home between parent and child would not be considered a “change in ownership”, provided that a Claim for Reassessment Exclusion is timely filed.

Under these Propositions, your purchase of your brother’s 50% interest using your own money would be deemed a “change in ownership” as to that portion, because it would be deemed a non-exempt transfer between siblings, rather than a parent — child transfer.  Your purchase would then trigger a reassessment as to that 50%.

Good news, however!  There is a workaround that has been approved by the California State Board of Equalization (“BOE”).  If — rather than using your own money — the trustee of the trust borrows money from a third-party lender, securing that loan by the home, and then distributes the entire home to you (encumbered by the loan amount) and an equivalent value in cash to your brother, there would then be no change in ownership and no reassessment.  You would then be responsible for the loan.

In short, where the trust already has sufficient cash to make the non-pro rata distribution work, then the division can usually be made without reassessment.  However, where the trust does not have sufficient cash to make an equal distribution, that is where special borrowing must occur in order to avoid reassessment.

To illustrate how this applies in various fact patterns, consider the following scenarios.  In each case assume that the home has a value of $500,000, that the trust does not prohibit a non-pro rata division of assets, that it permits the trustee to borrow money, and that a timely Claim for Reassessment Exclusion is filed.

1) The only asset in the trust is the home.  You raise your own $250,000 to buy out the interest of your brother. Change in ownership as to his 50% thus purchased. Reassessment and increase in the property tax bill.

2) The only asset in the trust is the home. At the conclusion of trust administration, it is allocated by deed 50-50 to you and your brother.  No change in ownership; No reassessment.

3) The trust is comprised of the home and $500,000 in cash. The home goes to you and all the cash to your brother.  Same result as in #2: No change in ownership. No reassessment.

4) The only asset in the trust is the home. Trustee borrows $250,000 from a third-party lender, and distributes the home encumbered by the loan to you and the $250,000 in cash to your brother.  Same result as in #2: No change in ownership. No reassessment.

5) The trust is comprised of the home and $100,000 in cash, for a total trust estate of $600,000. Trustee borrows $200,000 from a third-party lender, and distributes the home encumbered by the loan to you and $300,000 in cash to your brother. Same result as in #2: No change in ownership. No reassessment.

Note:  These transactions must be handled very carefully, a suitable lender  engaged and adequate documentation furnished to the County Assessor.  This is not a do-it-yourself project, and it is strongly recommended that these transactions be fully supervised by an attorney familiar with trust administration. The same concept may also be used in a probate administration, but court approval may be required if all parties do not agree.

If handled correctly, preserving a parent’s low property tax base can result in thousands of dollars in savings over time and help make retention of the family home a more affordable option.

Note:  As regards the borrowing in Options #4 and #5 above, there may be other approaches to preserving the parent–child exclusion, which would not require borrowing from a third-party lender. However, these other approach would require that specific language be in the trust document, itself. Examples:  The full parent-child exclusion would apply where the trust instrument, itself, (1) gives one child the first option to purchase real property (“right of first refusal”): BOE Letter 625.0233 (August 19, 2013);  or (2) the trust instrument gives one child the right to include the trust realty as part of his share, on condition that he provide sufficient assets to the other child to equalize the distribution. BOE Letter 625.0235.025 (February 22, 2010).

CAUTION:  Before undertaking any of the strategies above, consider the effect of Proposition 19, narrowly passed by the electorate on November 3, 2020.Its provisions, making dramatic change to the Parent–Child Exclusion, become effective February 16, 2021. See the following article on topic: “Preservation of Parent’s Low Property Tax Rate Soon To Be More Difficult For Children: Planning Window Closing”. Prop 19 must now be considered before undertaking any of the strategies outlined above, and will be controlling to the extent of any conflict with prior law and prior BOE Letters and opinions, including those referenced below. That said, we have secured informal advice from the BOE that the Non-Pro Rata Distribution discussed herein has not been changed by Proposition 19, provided that other Prop 19 criteria are met as to the home, citing BOE Letter of 02/16/2021 entitled “Intergenerational Transfer Exclusion Guidance. Questions and Answers”, calling attention to Q&A # 25 on page 5 of this Letter. 

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References:  (1) State Board of Equalization, “Parent-Child Exclusion”,  Assignment No: 09-243. February 22, 2010; (2) BOE letter to Honorable Stepeh L. Vagnini, March 10, 2005, Probate and Non-Pro Rata Distributions/Sale to a Child, No 625-0251;  (3) BOE Letter 625.0252, March 27, 2013, Probate and Non-Pro Rata Distribution; (4) Effect of Disclaimer. BOE Letter NO. 625-0082;  (5) FAQ’s Re: Parent–Child Transfers; No. 625-0000; (6) BOE Opinion No. 2008/018 dated February 29, 2008; (7) California Probate Code §16246 (Trust Administration; [trustee may distribute assets in kind pro rata or non pro rata].) and  §11950 (Probate Administration); and (8) Chapter 12 of the Assessors Handbook, specifically example 12-6 at page 90; (8) BOE Letter No. 0208/018 dated 2/29/2008 on the Parent-Child and Grandparent–Grandchild Exclusions, especially Q&A # 26 [“step-transaction doctrine” discussed in Q & A section, page 8].; (9) Change in Ownership–Life Estate Remainder Interest Transfers; Assignment No: 14-115 (April 7, 2015); (10) BOE Letter No. 2008/018 (2/29/2008) and, specifically, Q&A #’s 35, 36; (11) Property Tax Annotation 625.0235.005; BOE Letter to the Honorable Stephen L. Vagnini [a trustee who elects non-pro rata distributions may encumber trust property with a loan, distribute the loan proceeds to other beneficiaries, and the encumbered real property to one beneficiary, in order to equalize the distribution, (08/04/2003);  (12) Durante v. County of Santa Clara (11/30/2018) [Court found that a Life Estate is substantially similar to a fee interest, and therefore the creation and transfer of a life estate, from sibling to sibling, was a change of ownership triggering reassessment as to the 50% interest of the sibling making the Life Estate transfer; 6th DCA; 29 Cal.App.5th 839 (11/30/2018)].   A general reference to property taxes is available on the website of the Alameda County Assessor. Click here to view. CEB, Estate Planning, “Nonprorata Allocation of Property”, ☻1 15.16.

Joseph Bohnett v. County of Santa Barbara, (DCA 2nd. 01.19.2021), denying a Claim for Parent-Child Exclusion where one of 13 children/beneficiaries purchased his deceased parents’ former residence, not from the trust, but from his other siblings.  This decision basically affirms the strategy discussed above and the need for the Trustee to be the party obtaining the equalizing loan, for the Trustee to make the equalizing distribution, and for the Trustee to be the party signing the deed. The Cal.4th case citation is not available as of the date of this addition to these references.

On Nov. 3, 2020, voters in California will decide whether to modify this arrangement via proposed Proposition 19; Click here for a summary of how the proposed Proposition would modify current law. Update: it passed by a narrow margin. See “Caution” above.

Transfer to A Trust: [Cal Rev & T Code § 61(h); BOE Property Tax Rules 462.160]; Transfer with Reserved Life Estate:  [Cal Rev & T Code § 61(g) and 62(e); Rule 462.060]

Posts By: Gene Osofsky

Q. I have been hearing snippets of news lately about the Magna Carta. What is it and why is it important?

A. The Magna Carta of 1215 is considered by some to be the most important legal document created in Western Civilization during the last millennium. Historically, it was a peace treaty between King John of England and his disgruntled Barons, who were unhappy with the King’s abuse of power and excessive taxation.  It was, in fact, 800 years ago this month, that King John of England affixed his Great Seal to a piece of parchment that is said to have been written by the Archbishop of Canterbury to resolve a threatened civil war between the King and his Barons.

The Magna Carta (“Great Charter”) is considered to be one of the first legal documents wherein the power of the sovereign was limited by the rule of law.  Until then, a word from the King could result in the seizure of a man’s lands or the loss of his head.  It is comprised of 63 clauses addressing specific grievances of the Barons. Buried within them are a number of provisions which limited the absolute power of the King and influenced the development of the rule of law in England and elsewhere through the present day.  Most famous is clause 39 which reads as follows:

“No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgment of his equals or by the law of the land.

“To no one will we sell, to no one deny or delay right or justice”

Sound familiar?  The founders of our country were inspired by the principles first enunciated in the Magna Carta, and we find echoes of its influence in the Declaration of Independence, the Bill of Rights, and our own Constitution.

Historically, the Magna Carta did not long maintain the peace between King John and his Barons.  Yet some of the fundamental concepts first enunciated in that Great Charter, and its subsequent iterations signed by other monarchs, live on today in the basic laws of England, France, the United States, and much of Western Civilization.  Indeed, some trace the origins of democracy back to the events of that fateful day, June 15, 2015, at Runnymede, England.

I, personally, have a replica of the Magna Carta hanging in my office, and I periodically gaze upon it as a reminder of the long road from the time of absolute power vested in a king to a democracy based upon the rule of law and the value of individual freedoms.