Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2018

Property Tax Annotations

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Annotation 493.0131

493.0131 Trusts. Grandmother died and left various assets in trust to Grandmother's daughter (Parent), as trustee and income beneficiary for her lifetime. Parent, as trustee of the trust, used trust assets to purchase the subject real property, which was then held in the trust. Parent died in 2007 and was survived by two living children (grandchildren), and living children of her two predeceased children (great-grandchildren).

Generally, trustors are considered to be the transferors of real property that passes to beneficiaries, including remaindermen, under the terms of their trust instruments. In this case, Grandparent is the creator of the remainder interests pursuant to the terms of the trust. Parent, as life beneficiary, only has the right to enjoy the property during her lifetime, and never has the power to direct the disposition of the property either during her life or upon her death. Because Parent is not the transferor, the parent-child exclusion is not available. While Grandmother could be considered an "eligible transferor" with respect to all of the qualifying property transferred to the remaindermen under the terms of her trust, this does not apply with respect to property acquired by the trust after her death. Property that was never owned by a transferor cannot ever be property of that transferor within the meaning of subdivision of section 63.1(a)(2).

Thus, later acquired property does not qualify for either the parent-child or grandparent-grandchild exclusion when the beneficial ownership vests in the trust's remainder beneficiaries. C 12/22/2008.