Legal Question in Wills and Trusts in California

Transfers between parents and children do not affect property taxes. It is in the form.

You have to follow the directions in the trust and distribute the property to the beneficiaries. If the house is passing from your parents to you and your siblings, you must file a claim with the county for exclusion from reassessment for parent-child transfer. (Note that intra-sibling transfers are not exempt).

There is no increase in property taxes when property is deeded out of a trust to the beneficiaries designated to receive it upon dissolution of the trust. You also get a stepped up basis for capital gains taxes. You'll have to check with a tax accountant to be sure, but you may be screwing yourselves in that respect by holding the property if it has decreased in value. My best guess is that the IRS is going to hold you to the lower of the two values between the value when you could have deeded it to yourselves and the value when you do.