Legal Question in Wills and Trusts in California

You should check with the assessor's office in the county where the propety is located. They have their own definitions of what the term "sell" means. Since the death of one of the settlor's does not automatically mean the assets are distributed [depends on what the trust says], the re-assessment will come either when the property is transferred to the trust or transferred to the beneficiary.

Depends on whether the beneficiaries are children of the settlor(s).

As the previous answers say, but not particularly clearly, the tax treatment does not change until the property is distributed out of the trust by its terms. If the terms of the trust require the property to remain in the trust, the trust becomes an irrevokable trust and will need to obtain a TIN to become a legal tax entity. There should not be a reassessment at that point. If the property is distributed out of the trust, now or later, then it will depend two whom the property goes. Certain people are allowed to receive property by trust or will without the Prop 13 reassessment (and with the capital gains basis resetting to the market value at the time of transfer, which is another nice benefit). Other people are subject to reassessment and take at the original basis.