Trusts and Estates

Bohnett v. County of Santa Barbara

Cite as B303520
Filed January 19, 2021, Second District, Div. Six

By Daniel C. Kim
Weintraub Tobin Chediak Coleman Grodin Law Corporation
www.weintraub.com

Headnote: Real Property Tax – Reassessment on Death

Summary: In determining whether a change in ownership that requires reassessment of real property has occurred the inquiry is focused on the transfer of the beneficial, or equitable, ownership of the property, not the transfer of legal title.

In 1999, Bernard C. Wehe and Sheila F. Wehe created a family trust into which they transferred their primary residence. The trust provided that upon their deaths, the estate was to be distributed equally among their thirteen children, including Bohnett. Sheila died in 2003. Bernard died in 2008. In 2012, the successor trustee filed a Claim for Reassessment Exclusion for Transfer Between Parent and Child (“Proposition 58 Claim”) identifying Sheila and Bernard, as transferors, and the thirteen children, as transferees. Then, in 2013, Bohnett and his wife purchased the property from the trust for $1,030,000, with the sales proceeds distributed equally among the thirteen children, including Bohnett. The County of Santa Barbara concluded that the 2013 sale resulted in a 92.3 percent (i.e., twelve-thirteenths) transfer in ownership and reassessed the property. The Bohnetts appealed.

The appellate court affirmed. For purposes of determining change in ownership relating to a Proposition 58 claim, the inquiry is focused on transfer of the beneficial or equitable ownership of the property, not the transfer of legal title. The court held that beneficial ownership of the property was transferred to the thirteen children when Bernard died and the trust became irrevocable. Thus, upon Bernard’s death, the children received the property’s primary economic value and the equitable title in the property, despite legal title remaining with the successor trustee. The subsequent 2013 purchase was, therefore, a transfer of ownership from the children, as sellers, to the Bohnetts, as purchasers. As a sibling-to-sibling transfer, the property was properly reassessed. 

https://www.courts.ca.gov/opinions/documents/B303520.PDF

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