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February AAOC General Membership Meeting Recap
Members of the Apartment Association of Orange County (AAOC) enjoyed a golden opportunity to get the latest tax and estate planning information for 2021, and have their questions answered, during the association’s online General Membership Meeting on Tuesday, February 16, 2021.
AAOC was pleased to welcome back Anson Cain, Esq., with the Irvine-based law firm of Albrecht and Barney. Cain, who has become one of the “go to” legal professionals for AAOC members on tax and estate planning matters, initially noted the startling statistic that 55 percent of Americans do not have an estate plan. Without a plan, an estate could go into probate for up to two years. And for those Americans who do have an estate plan, 71 percent of them have plans that are not up to date.
Meeting Recap — continued on page 30
FEBRUARY 2021 SNAPSHOT RENT COLLECTIONS
MULTIFAMILY SOCAL SURVEY DAN BLACKWELL & TEAM
Responses were collected from owners with properties located primarily in Orange County, and bordering regions of Los Angeles County. The dataset primarily includes Class B & C properties ranging from 5-85 units.
Our February survey results are summarized as follows: 4%
96%
Collected Delinquent/Outstanding
Cain indicated that the basic components of an estate plan should include a revocable living trust, a pour-over will, powers of attorney for asset management and an advance health care directive. He then stressed the necessity of having an estate plan reviewed on a periodic basis, and not just stored away in a filing cabinet. He pointed out that assets should be properly titled in the name of the trust, along with indicating desired and timely friends and family members.
The presentation focused heavily on the implementation of Proposition 19, the ballot measure that voters approved last November and that went into effect on February 16, 2021. It has, among other things, forced individuals and families to reevaluate their estate plans, given the new rules effecting the transfer of real property from parents to children and property tax reassessment protections.
“The old Proposition 58 parent-child transfer rules are out the window,” said Cain, adding, “You can still transfer a primary residence and avoid reassessment, but you must comply with new requirements.” Under Proposition 19, the residence that is transferred from parent to child would have to become the child’s principal residence within one year of the transfer for the property tax reassessment exemption to remain.
If the principal residence requirement is met, the property’s assessed value is then determined based on whether the property’s value at the time of transfer is greater than the parent’s assessed value by more than one million dollars.
If the fair market value of the property is less than the parent’s assessed value (plus one million dollars) then the child takes the parent’s assessed value. If the fair market value is greater than the parent’s assessed value (plus one million dollars), then the fair market value of the property over and above the parent’s assessed value (plus one million dollars) will be reassessed for property tax purposes.
Cain pointed out there are still many unknowns regarding the longterm implications of Proposition 19, including: How long after a transfer does the child need to use/maintain the home as their principal residence? Does the child need to report the residency to the county accessor’s office? And, if there is more than one child, do all children need to live in the property together?
According to Cain, there are a variety of ways to effectively plan and navigate Proposition 19, including creating an LLC, Limited Partnership, or Corporation with a proportional interest transfer, such as a 50/50 split with no property tax reassessment. The key is everything more than 50 percent gets reassessed. Each situation is different, and legal guidance is suggested to determine the best individual course of action.
Insurance coverage was also discussed as part of Cain’s presentation, with him pointing out the possibility of having multiple claims at the same time. He pondered a variety of questions and possible solutions for the consideration of the online audience, including: How do you protect your personal assets in the event your tenants don’t pay their rent, or you are unable to pay the mortgage on your property?
Cain concluded his remarks by reminding members of the importance of proper and timely estate planning when the “seas are calm” and then answering a wide range of questions on the topics of the evening.
AAOC wishes to thank CBRE Multifamily SoCal (Dan Blackwell), Farmers Insurance (Theresa Simes Agency), and Sullivan Property Management for their generous sponsorship of this General Membership Meeting.
The next AAOC General Membership Meeting will be presented online on Tuesday, March 16, 2021 at 7 p.m. It will be an opportunity for our members to “Ask the Experts” about their legal, maintenance, and property management questions. Registration is open at www.AAOC.com.
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