Prop 19 can potentially have a massive impact on property tax increases for your children and future generations. Thankfully, there are steps you can take now to protect your property and hard-earned assets. Our team at GIlfix & La Poll Associates LLP explains what steps California property owners can take to preserve low property taxes.
Learn more about how to preserve low property taxes in our webinar below.
The Negative Impact of Prop 19
As of February 16, 2021, the parent-child protection of prop 58 is gone and was replaced by prop 19. When a parent passes away, the primary residence now goes to children with some property tax protection (up to $1 million in assessed value) only if children reside in the residence. Prop 19 doesn’t protect other property. Therefore, if a child decided they wanted to rent the property, the tax protection would no longer apply. With prop 19, property tax could increase by exponentially compared to the previous property tax. We have seen increases of over 20x for families that owned properties for many years, and who didn’t plan!
How Our Dynasty LLC Process Can Help Preserve Low Property Taxes
Our firm has developed customized approaches to preserve low property taxes for generations. There is no “one size fits all” approach – we must be cognizant of property, capital gains, and estate tax issues. Depending on your situation, we can develop a tax-optimized approach that can save your family hundreds of thousands, or even millions of dollars over time.
By leveraging customized “entities,” layered with Family Protection Trusts, we can preserve low property taxes for future generations, with enhanced asset protection. This is a multi-step approach that is tailored to your family’s specific situation. The process can deliver extraordinary, multi-generational protections for your property or properties while retaining low property taxes.
As part of our customized approach, we typically include Family Protection Trust structures. The Family Protection Trust (FPT), a type of “dynasty trust,” is a long-term irrevocable trust created for the benefit of your children, grandchildren, and beyond.
Family Protection Trusts can provide 3 major benefits for future generations:
They provide protection against future divorce, helping to protect inherited assets from a divorce settlement (it is like a prenuptial agreement for your children, grandchildren, and even great-grandchildren), they provide a high level of protection if one of your children or grandchildren is ever sued, and assets in Family Protection Trusts are largely protected from estate tax exposure – potentially saving $millions when assets pass from your children to (future?) grandchildren.
By layering in our customized Dynasty LLC approach with Family Protection Trusts, we can preserve low property taxes, while creating multi-generational asset protection for your home, rental property or properties, your cabin, or any other California property.
Contact us at (650) 683-9200 if you’d like to explore these solutions, and see our webinars if you’d like to learn more.