Prop 13 allows the county assessor to reassess the tax value of the property when there is a change of ownership.
The assessor treats the death of the trustor/owner as a change of ownership as of the date of death, for real property held in the trust, even if nothing is recorded until later.
The law requires the next of kin to mail or deliver to the county assessor a change of ownership / notice of death of real property owner on a specific form, within 150 days of the death.
Limitations on the exclusions from reassessment at death:
If the trust leaves the property to the spouse of the owner, there is no limit on exclusion from reassessment of the values or type of property, i.e., either owner occupied as primary residence or not owner occupied.
If the trust leaves the property to a child or children, the child or children must file with the county assessor a claim for exclusion from reassessment using a specific form, to avoid the reassessment as of the date of death of the parent/owner.
Limitations the amount subject to the exclusion from reassessment on the parent to child exclusion:
No limit on the value of the owner’s primary residence
A total of $1,000,000 of “full cash value” i.e., assessed value, for property other than the owner’s primary residence.
Any real property interest that passes to a person who is not a spouse, a child (including adopted children, in laws (e.g., daughter in law) and in some cases, stepchildren) or in limited cases to grandchildren when the proper forms are timely filed with the county assessor, is subject to reassessment to fair market value as of the date of death of the trustor/owner.
When reassessment occurs, the county will issue a notice of reassessment and a supplemental tax bill for the increase in real property taxes from the date of death through the balance of the year, until a new, updated tax bill is issued.
The rules are complicated and technical. You should consult with an estate attorney on your particular case.