The average Silicon Valley Homeowner used to be able to leave his home to his children as part of his estate planning. There were tax advantages just as there are for inherited 401k plans. Many parents hope to create a family home or business that will help their children and possibly their grandchildren. Proposition 19, promoted as “Home Protection… (for) … Victims of Wildfire” had the more significant impact of making it difficult to create an inherited family home as part of your estate planning. Previously, there would be no property tax reassessment when a principal residence was transferred to a child. Proposition 19 only shelters $1M of increased value from new taxation, and only if the child uses the home as his principal residence. If you have two or more children, one of them would essentially have to buy out the interest of his sibling(s). A mortgage to do this would be much more expensive than a standard home purchase mortgage.
A Silicon Valley estate planning attorney, John C. Martin, discussed this and other issues at a 2023 seminar held at JLee Realty. A recording has been posted at https://julianalee.com/reinfo/proposition-19.htm.
