Understanding Proposition 19 and Its Impact on California Families

California voters passed Proposition 19 in November 2020, and its provisions took full effect in 2021. While much of the attention has gone to how Prop 19 helps certain homeowners transfer their property tax base when moving, the bigger impact for estate planning has been on family property transfers. For many California families, Prop 19 has changed the rules — and not always in their favor.

What Changed Under Proposition 19

1. Parent-to-Child Transfers Are Now Limited

Before Prop 19, parents could transfer their primary residence, and even up to $1 million of other real estate, to their children without a property tax reassessment. That meant kids could inherit rental property or vacation homes while keeping the parents’ low property tax base.

Under Prop 19, this exemption has been sharply restricted:

• Only the family home or family farm qualifies for parent-to-child (or grandparent-to-grandchild, if the parents are deceased) transfer protections.

• Even then, the child must use the home as their primary residence after the transfer.

• If the property’s fair market value is more than $1 million above the existing assessed value, part of the property will still be reassessed.

  
  

2. Base Year Value Transfer Benefits Expanded

Prop 19 also expanded the ability for seniors (55+), disabled homeowners, and wildfire/disaster victims to transfer their low property tax base to a new home anywhere in California. They can now do this up to three times, not just once, and the replacement home can be of higher value (with some adjustments).

How This Impacts Estate Planning

Families Losing Property Tax Benefits

• Many California families once planned to leave multiple rental properties or vacation homes to children with minimal property tax impact.

• Under Prop 19, these transfers will now trigger reassessment unless the property is the family home or farm and the child qualifies.

• This means significantly higher property tax bills for heirs — sometimes making it impractical to keep inherited property.

  
  

Primary Residence Transfers Require Careful Planning

• Families that want to pass down the family home need to ensure the child intends to use it as a primary residence. If not, reassessment is inevitable.

• Estate plans should clearly reflect these intentions, and trustees must be prepared to file the proper claim forms with the county assessor.

  
  

Gifting and Trust Strategies May Need Revision

• Older plans that relied on the pre-Prop 19 parent-to-child exclusion (such as transferring rental properties) may now be outdated.

• Families may need to explore alternatives, such as family partnerships, charitable planning, or deciding whether it makes more sense to sell rather than transfer.

  
  

Practical Steps for California Families

1. Review Your Estate Plan

   If your plan assumes you can transfer multiple properties tax-free to children, it likely needs an update.

2. Communicate With Heirs

   Discuss whether children want to keep the family home or rental properties, or whether selling is more realistic given new property tax burdens.

3. File on Time

   If a parent-to-child exclusion applies, heirs must file a claim with the county assessor, usually within one year of transfer.

4. Consider Alternatives

   Some families explore holding property in entities or trusts to manage future tax exposure, though these approaches come with trade-offs.

   
   

Conclusion

Proposition 19 has reshaped California estate planning. For many families, the dream of keeping real estate in the family across generations is more complicated — and sometimes more expensive — than before. The key is to review and update your plan so that your intentions for passing down property match the new legal reality.

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