Property taxation: change in ownership: generational transfers: special needs trusts

It clarifies that a special needs trust is an eligible vehicle for California’s generational-transfer property-tax exclusion. This can preserve the exclusion when a qualifying home or family farm is transferred for the benefit of a person with a disability.

What the law does ​

• Treats a special needs trust established under Probate Code Section 3604 as an eligible trust for a qualifying generational property transfer.
• Allows the transfer through that trust to qualify for the existing change-in-ownership exclusion, if all other requirements are met.

Who it affects ​

• Families transferring a principal residence or family farm between eligible parents and children, or qualifying grandparents and grandchildren.
• Minor or disabled beneficiaries for whom a court-established special needs trust is used.

Context ​

The exclusion generally preserves the prior taxable value up to the applicable $1 million value adjustment, rather than reassessing the entire property at market value.