For many California families, the family home is more than just real estate—it’s where memories are made, traditions are passed down, and wealth is built over generations. Unfortunately, many homeowners don’t realize that Proposition 19 dramatically changed the rules for passing a home to children or grandchildren.

If your estate plan hasn’t been reviewed since these changes took effect, your loved ones could face a significant increase in property taxes after inheriting your home.

What Is Proposition 19?

Effective February 16, 2021, Proposition 19 changed California’s property tax rules for inherited property. Before Proposition 19, parents could often transfer a primary residence—and, in some cases, other real estate—to their children without triggering a property tax reassessment. Today, those rules are much more limited.

How Does Proposition 19 Affect Inherited Homes?

Under current law, a child may keep a parent’s property tax assessment only if:

• The property was the parent’s principal residence.
• The child also uses the property as their own principal residence within the required time.
• The property’s assessed value does not exceed certain statutory limits before reassessment applies.

If these requirements are not met, the property is generally reassessed to its current market value, which can significantly increase annual property taxes. For families who hoped to keep a vacation home, rental property, or even the family residence as an investment, the tax consequences can come as an unwelcome surprise.

A Simple Example

Imagine your parents purchased their California home many years ago for $250,000. Because of Proposition 13, their taxable value may have increased only modestly over time. Today, that same home could be worth $1.5 million. If the home no longer qualifies for the parent-child exclusion under Proposition 19, your inherited property taxes may be calculated based largely on today’s market value rather than your parents’ lower assessed value. The result could be thousands of dollars in additional property taxes each year.

Does a Living Trust Avoid Proposition 19?

One of the biggest misconceptions is that placing a home into a revocable living trust automatically avoids Proposition 19. It does not. A revocable living trust remains one of the best ways to avoid probate and simplify the transfer of assets, but it does noteliminate the property tax rules established by Proposition 19. That’s why it’s important to view estate planning as more than simply creating a trust. Your overall strategy should consider your family’s goals, your real estate holdings, and the potential tax consequences for future generations.

What Should California Homeowners Do?

Every family’s situation is unique, but it’s a good idea to review your estate plan if you:

• Own a home in California.
• Own rental or investment properties.
• Have children or grandchildren who may inherit your property.
• Have not updated your estate plan since 2021.
• Want to preserve your family’s wealth while minimizing unnecessary taxes.

Even if your estate plan is only a few years old, changes in California law may mean it’s time for a review.

Estate Planning Is About More Than Avoiding Probate

Many people think estate planning ends once they have signed a will or trust. In reality, laws change, tax rules evolve, and your family’s circumstances change over time. A periodic review can help ensure your estate plan still reflects your wishes and addresses current California laws, including Proposition 19.

How Tyre Law Group Can Help

At Tyre Law Group PC, we help California families create estate plans that are designed to protect their loved ones and prepare for changing laws. Whether you’re creating your first living trust or reviewing an existing plan, we’ll help you understand how Proposition 19 may affect your family’s real estate and discuss planning options tailored to your goals.

If it’s been several years since you reviewed your estate plan—or if you own California real estate—now is an excellent time to schedule a consultation. A proactive review today may help your family avoid unexpected challenges tomorrow.