Will the transfer of real estate from a corporation to a trust vesting trigger reassessment of the property when all the stockholders do not receive equal proportional beneficial interests in the trust vesting?

Facts: A corporation transfers ownership of real estate to a trustee of a trust. The beneficiaries of the trust were fewer than all the stockholders in the corporation. The beneficiaries of the trust held 100% of the voting rights in the corporation as well as in the trust. The county assessor reassessed the value of the property due to the transfer of title to the property from the corporation to the trust.

Claim: The assessment board claims no change in ownership occurred since the voting stockholders in the corporation were comprised solely of the beneficiaries of the trust.

Counterclaim: The assessor claims a change in ownership occurred since some stockholders in the corporation were eliminated in the transfer as they did not receive beneficial ownership interests in the trust taking title to the property.

Holding: The California Supreme Court holds the assessor properly determined the transfer of title to the property from the corporation to the trust constituted a change in ownership without concern for any voting rights since the beneficial interests in the property indirectly held by the stockholders of the corporation were not identical to the interest held by the beneficiaries of the trust on the transfer. [Prang v. Los Angeles County Assessment Appeals Board (2024) 15 C5th 1152]

Prang v. Los Angeles County Assessment Appeals Board

Tax Benefits of Ownership: Chapter 32 — Change of ownership and assessment of replacement home