As with everything, there are Prop 19 consequences. Unfortunately, the California Voters, by approving Proposition 19, got rid of the inheritance property tax exclusion for everyone, even those with or without a trust.

As of mid-February, 2021, no inherited property will be able to keep the original property tax but will have a higher property tax. We still get the raise in basis on the property, eliminating Capital Gains Tax after the owner dies, but not the property tax benefit.

Some of the Prop 19 consequences mean that, basically, we now receive either the “raise” in basis and get rid of capital gains tax, or you can give the property during your lifetime in some cases and keep the property tax benefit – but not both. One option to keep the property tax benefit and the raise in basis of the property benefit is to hold the house in an FLP or LLC, so that there is no transfer to cause the property tax to change.