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URL:  https://boards.fool.com/since-i39m-in-ca-let-me-take-a-shot-at-that-34081383.aspx

Subject:  Re: 401K/IRA in probate Date:  12/10/2018  9:11 PM
Author:  vkg Number:  128262 of 128956

Since I'm in CA, let me take a shot at that.

Yes, it has to do with Prop 13. Under Prop 13, only certain heirs can retain the decedent's property tax base. As noted, siblings are not one of the approved heirs. (Children can inherit and keep the property tax base.)

So as of the date of death, the property taxes increase (I'm assuming an increase in value of the property while the decedent owned it rather than a decrease) because a sibling is the heir. Of course, it takes some time for the county assessor to learn of the death, find out who the heirs are, then value the property for property tax purposes. That new tax valuation and date is then passed on to the county tax collector who calculates the new tax and sends the bill to the owner. In CA, these are called supplemental assessments. They supplement the original tax bill.

It does not surprise me that vkg was able to sell the house before the supplemental assessment was finalized and issued. For more routine sales, it can take many months to get the supplemental assessment. I would not be surprised if a supplemental assessment for a transfer at death takes longer, since the assessor needs to gather more information than for a routine sale.


The assessor hadn't be notified because I didn't realize that the property would be reassessed during probate. I have a vague memory that my lawyer may have told me but at the time I was seriously overwhelmed. I had asked the title company before escrow opened if there would be a reassessment but was told there wouldn't be an issue. The title company was wrong.

Maybe I should have been more assertive but for the estate the results will be the same. I notified our real estate agent and she notified the title company. Our real estate agent hasn't handled many probate sales but I am surprised that the title company wasn't aware of the issue. I don't expect anything from our real estate agent or title company. It was for their information to avoid future problems.

In this particular case, it sounds like the supplemental assessment will cover the period from the date of death (when the tax base increased) to the date of sale (when the subsequent buyer will get their own assessment based on the price paid for the property). Her wording isn't the best, but I think I recognize the gist of the issue.

Yes

Like her, I am surprised that the title company who issued the title insurance policy for the benefit of the buyer and/or lender didn't insist on a provision for this supplemental assessment in the sale closing. If they didn't do so, they could certainly be on the hook for the assessment. It does sound like vkg is planning to do the right thing and pay the supplemental property tax assessment - which she would have done in the sale closing had everyone been on the ball. Then again, perhaps a close look at the closing settlement statement will show that those taxes were provided for in the closing. There's no way to know for sure without seeing the complete settlement statement and understanding each line on it.

--Peter


Taxes paid in escrow were based on my sister's assessment and not the estate's. I have spoken with the assessor's office and it is a valid additional tax bill. The notice of proposed assessment was sent a little over a month after the sale closed. In the next two weeks, I should receive the bill.

I might be able to argue a slightly lower assessed value because of the condition of the property, but the appraisal for the estate is 10% higher than the proposed evaluation. This is an argument that I might win but result in a bigger loss.
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