When an owner of real property in California dies, the county assessor needs to be notified of the owner's death. This involves filing the Assessor Form titled, "Change in Ownership – Death of Real Property Owner" within 150 days of the real property owner's death. It is related to (assists) but separate from any transfer in title documents that are filed with the Recorder's Office. Many people are unaware of the importance of this assessor form.
The Death of Real Property form is necessary to claim the specific exclusions from reassessment when they apply. That is, the interspousal exclusion, the parent to child exclusion (very limited), the grandparent to grandchild exclusion (even more limited), and the cotenants exclusion (limited) from real property reassessment on the change in ownership as of the prior owner's date of death. Let us discuss.
The interspousal exclusion applies when an interest in real property is left to the deceased owner's surviving spouse. The exclusion is relevant whether the surviving spouse receives an outright ownership interest or a beneficial interest through an ongoing trust during the surviving spouse's lifetime. While the surviving spouse owns or enjoys the use of the real property the often used interspousal exception applies.
If the surviving spouse is not the sole beneficiary, however, then the interspousal exception is reduced to the surviving spouse's proportionate interest in the property. For example, if the surviving spouse is one of several trust beneficiaries who live in the deceased owner's residence, then it is necessary to allocate the shared use of the property amongst the various trust beneficiaries / co-tenants. If appropriate, that might involve allocating the square feet of the decedent's residence between the spouse and the rest of the co-tenants (trust beneficiaries) where exclusive use areas within the residence are allocated to the exclusive use tenant and the shared / common areas are divided amongst all tenants.
The parent to child exclusion itself (very limited) also requires the child's submission of the additional "Claim for Reassessment Exclusion for Transfer Between Parent and Child" Assessor form. Since February 16, 2021, the parent child exclusion now only applies if the real property was both the deceased parent's primary residence and the child moves in (or already lives in) the residence within one year of the deceased parent's death. The child must also claim the homeowner's exemption to show the home is the child's primary residence.
The grandparent to grandchild exclusion requires the grandchild's submission of the additional "Claim for Reassessment Exclusion for Transfer Between Grandparent and Grandchild" Assessor form. This exclusion is even narrower than the parent child exclusion as it requires not only that the grandchild's parent (i.e., the deceased real property owner's own child) be deceased but also that the spouse of that deceased parent (i.e., the deceased real property owner's daughter-in-law or son-in-law) either be deceased or be remarried.
Lastly, the cotenant exclusion from reassessment requires that the deceased and surviving cotenant (only two cotenants allowed) together own 100 percent of the property either as tenants in common or joint tenants, for the one-year period immediately preceding the death of one of the cotenants, and that the property was their principal residence for that same period. Also, the transfer must occur due to a cotenant's death that results in the surviving cotenant obtaining complete ownership interest. Moreover, the surviving cotenant must sign an affidavit under penalty of perjury affirming that he or she continuously resided at the residence for the one-year period.
Even when no exclusion from reassessment applies, the Death of Real Property Owner form is also required to be filed when no exclusion applies to alert the Assessor that there is a change in ownership.
The foregoing brief discussion is not legal advice. Consult a qualified attorney for guidance. Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.
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