Legal Question in Wills and Trusts in California

Re: probate tax

She needs to start the probate immediately, or she can never encumber or sell the property and it could be a lot worse if this comes up later either when she wants to sell, or worse when she passes away.

The value of the home will be based on date of death value, regardless of when she starts the probate. Her basis will be that amount, especially since this was a parent to child transfer.

Our office specializes in trusts, estates and probate matters. Please feel free to learn a little more about each by viviting our firm's site at No-Probate.com. If you, or your friend, would like additional information or assistance, I can be contacted through the info here on LawGuru, or through our No-Probate.com website.

Scott

Re: probate tax

Not reporting the death to the County has no direct connection to whether it went through probate. If her father's estate was less than $100,000 [fair market value of house on his death minus the cost of original purchase by him, less another items that go to the basis of the house ass opposed to yearly deductible] she is not required to file probate. If he owned the house for more than a few years that profit/equity probably is much greater. The house takes as its basis the fair market value on the date of his basis and if she lives as her residnece for 2 of the last 5 years she will also get a $250,000 tax exemption [$500,000 married residneces].

Under the amendment to Proposition 13, there is no increase in the assessed value for property going from parent to child, but the County of Alameda form notifying them of such a change states they will not go back furhter than a few years for the full exception. If the assessed value goes up she does owe additional real property tax, but not income taxes on that increase. Whether the County follows its own rule, and whether the rule is constitutional are additional questioins.

It is worthwhile to spend several hundred dollars to get the legal advice of an attorney [local better in dreducing billing for travel time] who is expert in probate taxatiion and property transfer matters. The longer she waits the more in taxes and penalties she will owe. Also, she can never refinance or sell the house without legal title being conveyed to her.

Wish her luck.

Re: probate tax

She may be or become liable for back property taxes, but more importantly, she cannot sell or refinance the home. The basis of tax purposes will increase to the value of the property on the date of her father's death. This will substantially lower the capital gains tax upon sale, and may eliminate it entirely if she lives there long enough while she is the owner, to qualify for the $250 resident owner exemption.