Wednesday, June 14, 2017

Deed Case Study: Incorrectly Prepared Deed Results in Tax Reassessment

This story is a cautionary tale, an example of the potentially costly consequences of well-intentioned efforts from a family member.
Barbara Theobald, who has worked in our Walnut Creek office for more than eight years, was contacted by “Sherry”, a previous Living Trust client. Sherry needed assistance solving a dilemma with a Deed that her mother and brother had created for her.
  • Sherry created her Trust in 2014, and her mother, “Irene”, gave her another property in Redwood City.
  • Sherry transferred the property into her new Trust.
  • Irene had recently changed her mind and decided to transfer the property back into her own Trust, which requires preparing a Deed to transfer ownership.
  • Irene asked her son, “Richard”, to prepare the Deed.
  • Sherry signed the Deed and Richard recorded it with the county clerk in January 2017.

Property now being reassessed, with a considerable bump in taxes

In April, Irene received a notice from the assessor’s office that the property was being reassessed for tax purposes. The bill was substantial and Irene couldn’t understand what had happened. Barbara did some research and discovered that Richard had prepared the deed incorrectly. Instead of its being transferred from Sherry’s Trust to Irene’s Trust with the appropriate assessor forms so there would be no reappraisal of property taxes, the deed was recorded from Sherry as an individual to her mother as an individual and recorded as a gift. The lack of supporting paperwork to show that the property was going from child to parent caused the reassessment and the subsequent bump in property taxes.

Barbara was able to correct the Deed

Barbara was able to correct the Deed for Sherry and Irene, but it ultimately cost this family more money than it would have if they’d come to California Document Preparers in the first place to transfer and file the Deed. It also would have saved considerable time and anxiety.

A final note: DIY processes can often have consequences

We hear this a lot from our Do-It-Yourself (DIY) clients who abandoned the process. Those “simple, easy processes”—especially when it comes to Divorce and Living Trusts—can quickly become complex. Legal documents that have long-term consequences are not the place for guesswork.
Do you need to transfer your Deed? Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment today. You can also jumpstart the process with our easy-to-use, secure online storefront--we’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.

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