Successor trustee/'legal entity' on CALIFORNIA ASSESSOR FORM to transfer house

[rigaton]

My mom died in FEB of this year; she was primary trustee of our house and I was SOLE successor trustee. I have compiled and completed all of the necessary docs to transfer the title to me as single person at the REG/REC and then ASSESSOR's in LA county. THE forms are pretty straightforward, except for 1 question on ASSESSOR FORM BOE-502-D that baffles me.

THE previous q on the form asks 'the % of ownership that I will receive and my relationship to the decedent.' I put 100%, SON, and my name. SO far, so good, but now comes the q that has stumped me and stymied me for 4 months.

Will the decree of distribution include distribution of an ownership interest in any legal entity that owns real property
in this county? If YES, will the distribution result in any person or legal entity obtaining control of more than 50% of
the ownership of that legal entity?

--OF course the house is in LA COUNTY and LA city or I would not be completing the form for LA county; however, I interpret the q 2 ways and do not know which is correct. HECK, maybe both are wrong.

THE distribution of the ownership interest is 100% to me, the SON/heir/successor trustee. DOES that mean that the distribution results in MY obtaining control of more than 50% of the ownership of the 'legal entity?' I say that it obviously does, as 100% > 50%, and I have to wonder why the Assessor is asking virtually the same question twice.

THE other interpretation is that PERHAPS I, as single owner, am not a 'legal entity,' or the house is not a 'legal entity,' if legal entity means company, corporation, business, and so on, and therefore the distribution does NOT result in 'any person or legal entity' obtaining control of more than 50% of that legal entity.

ANY help would be appreciated. WOULD that the document had been written in PLAIN ENGLISH rather than legalese; or conversely, that I had studied law in college/grad school rather than PSYCH!

Thanks.

 

[zddoodah]

My mom died in FEB of this year; she was primary trustee of our house and I was SOLE successor trustee.

I assume what you meant was that she was the trustee of a trust that is the titled owner of the house? Assuming that's correct, let's call your mother "Mary Smith," and please answer the following questions:

1. Was she also the trustor/settlor of the trust?
2. Was the trust a revocable living trust (prior to her death)?
3. Is the name of the trust something like "the Mary Smith Revocable Trust"?
4. Is there a deed by which Mary Smith, an individual, granted title to "Mary Smith, as trustee of the Mary Smith Revocable Trust" (or words to that effect)?
5. Was your mother married at the time of her death?
6. It appears that you are also a beneficiary of the trust. Are there other beneficiaries (e.g., other children)?
7. What assets (other than the house), if any, are owned by the trust? In particular, are there any liquid assets?

I have compiled and completed all of the necessary docs to transfer the title to me as single person at the REG/REC and then ASSESSOR's in LA county.

So...the trust provides that, upon your mother's death, title to the house is to be transferred to you?

ASSESSOR FORM BOE-502-D

Before I go on (and hoping that you'll actually answer the questions I asked), why do you think you need to file this form? Also, the BOE-502-D form cites section 480(b) of the Revenue and Taxation Code. Have you read and do you understand that section?

I'll wait for your answers before trying to provide further information.

 

[rigaton]

re: zddoodah

YOUR questions were easy to answer, as I have the trust, in paper form, in front of me and the assessor's form 502 on a pdf on my computer in front of me. I appreciate your help.

The trust was the 'Mary Smith trust dated October, 2022.' Mary Smith was my mom. I am her only child/heir/beneficiary/successor trustee.

1. Mary Smith, my mom, was primary trustee and settlor.
2. REVOCABLE trust.
3. Mary Smith trust dated October, 2022.
4. YES, a GRANT DEED (NOT A QUITCLAIM) dated in OCTOBER, 2022, at LA County assessor's, shows that "Mary Smith, a single woman, hereby grants to Mary Smith, trustee of the Mary Smith TRUST dated October, 2022, the following real property.'' THAT property is OUR HOUSE, the one that we have lived in since 1962 and have owned outright since 1988. I have the GRANT DEED IN paper form in my hand.
5. MY mom was divorced in 1966 from my dad and never remarried. HE is dead now, too.
6. I am sole beneficiary and her only child.
7. NO additional assets are owned by the trust. WE owned everything else such as bank accounts, cars, stocks, in joint tenancy. THE purpose of the trust was to give me the full stepped up value of the house upon her death, but we never knew that the paperwork after her death would be so difficult.

8. THE trust provides that the HOUSE, and everything else (IF we had decided to change the ownership of the bank accounts and so on, which we never did, thank goodness), goes to me and only me. NOBODY else is mentioned in the trust doc.

9. I called the REG/rec on 3/11/24 and was told on the phone what forms IT wanted (Affidavit of Death of trustee form, Original Death CERTIF, 2 Preliminary CHANGE OF ownership forms, although THE clerk would not explain why I needed 2 of them, and a GRANT DEED OR Quitclaim Deed, whichever I preferred).

I then called the ASSESSOR and was told to write a question on the website, which I did. THE ASSESSOR sent me an EMAIL on 3/15/24 that answered my question and included PDFs of the 3 forms that I need--a. BOE 58 AH for Parent-child exclusion of property tax reassessment, b. BOE 266 Claim for Homeowners' exemption, and c. BOE 502 D, the Change in ownership statement, death of real property owner.

I was also told to include the ORIGINAL DEATH certif AND the FULL COPY of the TRUST, which I have.

I think that I need the FORM BOE 502 D because the ASSESSOR told me to include it.

10. WHEN you mentioned
California Code, Revenue and Taxation Code - RTC § 480 (B)

I looked on the form and found the blurb about it on the front page, upper right side. I just read the aforementioned tax code and I now REALIZE that I am very rapidly running out of time, as I have 150 days after the date of death to file the papers with the ASSESSOR. THANKS FOR pointing it out.

I have the original docs from the formation of the trust and the docs that the ASSESSOR sent back to us when the title was changed in 10/22. I specifically have a Grant deed, a BOE 58 AH PAR-child, and a BOE 266 HOMEOWNERS' exemption. I DO NOT HAVE a BOE 502 D, which makes me wonder why my mom's lawyer, NOW also deceased, did not file it or the ASSESSOR did not return it.



IF you need more info, just ask. THANKS

 

[Taxing Matters]

THE purpose of the trust was to give me the full stepped up value of the house upon her death, but we never knew that the paperwork after her death would be so difficult.

If that was the sole goal of the trust then your mother paid for a trust she didn't need. She was the sole owner of the house. Had that been the case when she died the income tax basis in the home would be adjusted to fair market value (FMV) on the date she died, the same result you get with a revocable living trust (which is what I'm assuming she had). What the trust does that she wouldn't achieve just owning it in her name is remove the home from being a probate asset. For that reason revocable living trusts are very popular in California and other states where probate costs can amount to signficant money. I'm betting that was the prime reason for the trust in her situation too.

In California and some other states there is now another option to transfer real estate to a beneficiary without going through probate. It is the transfer on death (TOD) deed. This option is relatively new but more and more states are passing statutes that allow for beneficiary deeds. The California law allowing for TOD deeds has some very specific requirements, which you can read in the Sacramento Public library's summary of the TOD rules. That option is generally cheaper than using a trust, but the trade off is that if she wanted to change the beneficiary, the trust allows that change to be made a bit easier than the beneficiary deeds, though the difference at least in my state isn't all that much and my guess is that is true in California too.

I won't be surprised if some more options start popping up to avoid probate and provide some advantages that other alternatives don't provide. But the changes in the law regarding transfers of a decedent's property does mean that seeing an estate planning attorney is very good idea even for people with relatively modest estates. They may find out there are new options now available that they didn't know about before. Once the plan is set up, it's a good idea to periodically review it to see if any changes in the probate code or tax code would make a change in those plans a beneifical thing to do.

 

[rigaton]

re: Taxing Matters

MY mom's old friend drew up the trust at virtually no cost to her. PERHAPS his motive was, as you said, 'to remove the home from being a probate asset.' I also wonder if his goal was to give her/us protection in case of lawsuit, although I have read and heard that revocable trusts are not foolproof methods to protect assets.

IN any case, I am still grappling with the issue of whether my distributng the house to myself at the reg/recorder's office and then the Assessor's includes distribution of an ownership interest in any legal entity that owns real property
in this county, and If YES, whether the distribution will result in any person or legal entity obtaining control of more than 50% of
the ownership of that legal entity. IF my mom's attorney had drawn up a TOD document, then all of this might have been moot, but alas, he did not, so here I am.

 

[zddoodah]

If I were you, I would consult with a local attorney to make sure your administration of the trust is done correctly and that you end the process with title that is actually marketable.

 

[rigaton]

zddoodah wrote

If I were you, I would consult with a local attorney to make sure your administration of the trust is done correctly and that you end the process with title that is actually marketable.
----------
--I did not realize that the situation was so grave. I thought that I was dealing with a simple trust, not a complex one, but I guess that I was wrong.

I feared that if I erred anywhere in the process I would face losing the title or, as you said, not having it marketable. I also have worried that if the title were transferred properly, I might still lose the original, very low, property tax basis through some error of mine.

 

[Zigner]

zddoodah wrote

If I were you, I would consult with a local attorney to make sure your administration of the trust is done correctly and that you end the process with title that is actually marketable.
----------
--I did not realize that the situation was so grave. I thought that I was dealing with a simple trust, not a complex one, but I guess that I was wrong.

You are dealing with a (relatively) simple trust, but you are unsure about something that could have some big consequences if done wrong.

I feared that if I erred anywhere in the process I would face losing the title or, as you said, not having it marketable. I also have worried that if the title were transferred properly, I might still lose the original, very low, property tax basis through some error of mine.

All the more reason to sub in a pro.

 

[zddoodah]

You are dealing with a (relatively) simple trust, but you are unsure about something that could have some big consequences if done wrong.

Bingo. Spend a couple thousand now to avoid spending tens of thousands of dollars to fix your mistakes.

Many years ago, my sister died, and I became trustee of her revocable living trust. I hired an attorney to make sure I did everything correctly. While my sister's trust was slightly more complex than your situation (multiple beneficiaries, and assets beyond her home), I would not hesitate to retain the services of an expert in your situation.

 

[Taxing Matters]

Bingo. Spend a couple thousand now to avoid spending tens of thousands of dollars to fix your mistakes.

Many years ago, my sister died, and I became trustee of her revocable living trust. I hired an attorney to make sure I did everything correctly. While my sister's trust was slightly more complex than your situation (multiple beneficiaries, and assets beyond her home), I would not hesitate to retain the services of an expert in your situation.

Exactly.

rigaton, it's particularly important as a trustee of a trust or the administrator of an estate to get things right because of the fiduciary duties they have to others. Most trustees and administrators who aren't lawyers don't understand those duties and may never had even heard the term fiduciary duty before. If you get things wrong, you may be personally liable for that and you'd have to pay that from your own assets, not the trusts assets, and depending on what went wrong it may be very costly. By comparison, the money you spend getting good legal advice (which the trust may pay for) is cheap insurance against that problem. So don't just rely on what anonymous people on a message board forum may advise you to do.

 

[rigaton]

I agree that the prudent course is to consult an expert rather than take matters into my own hands. IF I fail on my own accord, the result would be costly.

THANKS for the sound advice. THIS issue is definitely not of the do-it-yourself variety. I appreciate the candidness of all of you