Happy Sunday!

We recently had a client that moved a property into a revocable living trust. When the next property tax mailer went out, included was a notice that they were being taxed more because of the move.

They were understandably concerned, and we were too.

To make a long story short (so you all don’t get freaked out) turns out it was an error from the assessor’s office, not anything they did or we did.

It will be fixed and there will be no property tax issues.

With that being said, I thought it would be nice to talk about why there are no property tax implications (or other tax implications) and if it’s different if it’s an irrevocable trust.

The reason revocable living trusts face no tax implications is, in the eyes of everyone, you and your revocable living trust are the same.

Your tax ID number is your social security number.

You maintain complete control over the property, including the ability to sell it, move it back into your own name, etc.

Because of that, there is NO change in property status when you move your property into your revocable living trust (personal residence or otherwise).

Hopefully that makes sense. Nothing to worry about here.

Now, if you have an irrevocable trust, things are very different.

Why?

You and your irrevocable trust are NOT the same.

In fact, you are completely different, by design.

Your irrevocable trust has its own tax ID number.

Usually your irrevocable trust has someone else in control of the trust (by design).

Usually you give up complete control.

When that happens the property changes hands, and you can get a property tax reset, etc.

To summarize, moving your property into your revocable living trust has NO tax implications. Period.

Hope this helps!

Have a great week!

Cheers,

Christopher Small
Owner
CMS Law Firm LLC

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