Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013
 

Property Tax Annotations


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P

625.0000 PARENT-CHILD TRANSFER

Annotation 625.0210

625.0210 Trusts. Husband and wife create a living trust the assets of which are on the death of either transferred to (A) a second living trust (survivors separate property and share of community property), and to (B) an irrevocable trust (deceased spouse's separate property and share of community property). The latter trust declares the survivor to be the income beneficiary for life with the right to have principal used, if necessary, for the reasonable support on maintenance of the survivor spouse. The survivor is named a co-trustee of the B trust along with a daughter who is the ultimate beneficiary of both trusts.

Since the power to invade the principal of the trust can be exercised only with the concurrence of the co-trustee daughter who has a substantial interest adverse to the exercise of the power, it is classified by Civil Code section 1381.2 as a special rather than a general power of appointment. If not exercised or if disclaimed by the holder of the special power, such a power is ineffective and the property subject to appointment passes from the creator of the power to the beneficiary. When a general power of appointment is not exercised, the property passes from the holder of the power to the beneficiary. The difference can be meaningful because of the relationship required and the value limitations of the parent/child exclusion. C 1/21/1992.