Understanding San Diego Probate

Real Property and Taxes

The real property, the home, is usually the biggest asset of an estate. Before it is sold, and before the beneficiaries receive their portion of the proceeds, there are some issues that the executor or administrator need to consider regarding taxes and the estate. Hi, I’m Kim Ward, Author of What to do when you are responsible for real estate a loved on leaves behind.

Here is a question that I’m frequently asked “is there anything I need to know regarding taxes and the estate?” Because taxes are changing all the time, I always ask the executor or administrator if they have a tax professional. A tax professional will be well-versed in current tax laws, and can answer any tax associated questions. If the executor or administrator does not have a tax professional I recommend contacting the attorney for a referral to someone that can help answer questions regarding the proceeds and potential tax liability.

As a wise advisor I know I can’t be all things, however, as the orchestrator, I often give introductions to other key players. This has proven to be quite stress reducing for executors and administrators. As executor or administrator you should never use personal banking accounts for handling any financial assets of the estate as it can create questions, from the beneficiaries, about the use of the estate funds. To help achieve this, you may be instructed by your attorney to obtain a tax ID for the estate. With this new tax ID, bank accounts can be opened to handle any use of funds related to the estate, including the funds from the sale of the decedents home. When we begin working together, I can help direct you on obtain the estates tax ID.

Another important point in regards to taxes is property taxes. Upon the decedents passing the county tax assessor will reassess the property tax to represent the current market value of the house. If all of the beneficiaries happen to be children of the decedent or with certain conditions grandchildren of the decedent, there is a special document called the parent-child exclusion document that can potentially save thousands of dollars for the estate. This document can save the estate thousands of dollars, but it is often overlooked. How will it save money for the estate? Much of the time, the home was purchased many years earlier, often times decades. When the decedent purchased the property they were locked into a lower rate of property tax based on what they paid for the house. Once they passed away, the tax assessors office reassesses the property taxes based on the current market value. This assessment, in many cases, can mean an increase of hundreds of dollars per month to the property expenses. It often takes six months to a year from the date of death to the date the property closes escrow, which can equate into thousands of dollars in potential savings for the estate if the original tax rate can be kept. You’ll be happy to learn that I can help you submit the proper documentation to keep the taxes from being reassessed.

Again, I’m Kim Ward, it’s never too soon to contact me to talk about your options and the steps that will need to be taken. please feel comfortable calling me at 619-741-0111.