Proposition 19 created serious hardships for many California residents who had hoped to leave an inheritance for their children and grandchildren. Now, a new ballot measure known as Repeal the Death Tax aims to reverse the impact of Proposition 19. If it passes, the Repeal the Death Tax initiative will allow parents and grandparents to bequeath property without worrying about excessive taxes.
Naturally, the news about Repeal the Death Tax raises many unanswered questions. At HCS Equity, we are prepared to help answer any questions about the new ballot initiative, or about Proposition 19. We are also ready to offer a third-party loan to a trust or estate in order to assist with equalization.
Here’s what you need to know about the new ballot initiative:
Repeal the Death Tax would restore the protections that property owners had before the passage of Proposition 19 in November 2020.
Prior to Proposition 19, parents and grandparents in California were permitted to leave their homes to their children and grandchildren, no matter what the value of that home. Benefactors could also leave their children and grandchildren an additional one million dollars.
Parents and grandparents could leave their home, business, or family farm to their beneficiaries, without needing to worry about a huge tax increase that might make it hard for their beneficiaries to keep the property. After all, the goal was to enable families to keep their home and their property in the family, instead of seeing their inheritance swallowed up by taxes.
Proposition 19 ushered in some major changes. The law, which took effect in February 2021, put a million-dollar limit to the value of the property that parents and grandparents could pass down to their beneficiaries. Once the property exceeded that level, its tax rate would be reassessed.
Proposition 19 also drastically limited the time for beneficiaries to file for a homeowner’s exemption to the tax reassessment. Instead of having three years, as they did under previous laws, homeowners now have just one year in which to request the exemption.
The Repeal the Death Tax ballot initiative would amend the state constitution to restore the previous protections. The aim of the initiative is to protect people who wish to keep property in the family and prevent the losses of family farms, homes, and businesses.
HCS Equity can help homeowners navigate through the changing laws. Our staff is always ready to answer questions and provide counsel about the best way forward for each unique situation.