35 Years after Prop 13, Has It Worked? [Jerry Brown and Christie]

Often described as the opening shot in the Reagan-era tax revolt, Prop 13 limited California’s property tax rates, but has it yielded greater fiscal discipline? What about tax and expenditure limits in other states?

Today is the 35th anniversary of the passage of Proposition 13. The California ballot initiative limited the state’s property tax rates and transferred responsibility for allocating local property tax revenues to the state legislature — but did it yield an increase in fiscal discipline?

“Nothing like planning for your parents to die while they’re still alive. Pretty macabre, actually.”

Oh no no no. Please, re-assess that view.

There are a great many things of consequence large and small that are a hundred times easier if they are handled in a mutually agreeable way versus under the duress of a parental death. I just went through this with my folks. I cared for them the last 5 years of my Mom’s life, 2006-2011, and my Dad, 97, is still in a board & care. My Mom and I talked all this stuff out in great detail, over many occasions, and the process of getting her into the same board & care for her hospice (physical problems) as my Dad (dementia) was handled, if I may say so, in virtuoso symphonic fashion by yours truly. (Although she died 3 years ago, my Dad actually has no idea that she died-—even though they lived in the same B&C for the last 6 mos of her life. And I have no intention of telling him, it would crush him. They were married 71 years) It happens to be rather unusual for an elder facility to intermix medical patients with dementia/Alzheimers patients. Why? Dunno. One of those things.

Over and over and over in this saga, I can tell you that this is a process you have probably done ZERO times and everyone you will interact with has done it 500 (or 5000) times. And I myself hate that asymmetry, because like many things, out of ignorance, you do not even know what questions to ask. But when the curtain comes down, you will be stuck following a script that you never even knew about.

Let me just list some things that were massively easier because they occurred via talk-it-out and plan.

Ensure that trust docs are in conformance with current law (they may have been written in 1985) When my folks *might* have died, 2010-2011, were entering senility, there was serious talk about a failure to extend the estate tax exemption at $5 MM, in which case it would have dropped to $1 MM. With my folks, who had a better than average house in a pricey neighborhood (their luck for picking it 25 years ago) and a ~~$1 MM stock account, that would have been a $550,000 check we might have had to write. We are not talking Rockefellers, just a middle class professional who put two kids thru school and worked a better than average wage for 40 years. And made no serious mistakes. $550K is a big check, in my book.

Whomever is taking care of them as for shopping and home expenses, if a trusted family member, get that person’s name on the house checking account.

You realize, I take it, that once one parent enters a state of observable senility, there is no way to have them notarize documents without a DURABLE power of attorney and if you haven’t achieved that POA BEFORE they go goo-gah, YOU NEVER CAN...without obtaining a conservatorship, a complete and total PITA that will probably cost $15K-$20K in legal fees and might take so much time that one dies before it is completed and if anything is screwed up at that juncture you could be indelibly HOSED with NO WAY to correct things. Completely avoidable by preparing the dur POA in advance. How can you prepare such a thing with a “reluctant” elder who is not willing to face their own demise? You can’t. But the consequence of not doing so can be profoundly expensive, compared to FREE.

Shop for a particular board and care location.

Develop contacts within the local social-worker network, a completely invisible underworld of people who work around most hospitals in the country who you never even know about. There are many, many invisible people who work around hospitals and elders who are going to be dying in a few years. Once you find a few of them, an entire underworld opens up that can be a profound resource for you....it is one of those things where YOU can take advantage of people who have done this 5000 times. And they are happy to help. Amazing.

In your case, IANAL, but it is almost always wrong to allow property to pass by anything but inheritance, if there is any way in the universe you can do so. Nobody should be buying RE out of a trust. In my humble opinion. There is, in general, no bigger mistake that a property owner can make than “putting their kids names on title so that the probate goes smoothly”. Big, big, enormous mistake. People make stupid, costly, awkward mistakes in these situations acting out of “common-sense” “instincts” which SUCK when it comes to actually conforming to THE LAW that will tax your eyeballs out if you give it the chance. There are VERY CRITICAL moves to make, and they must be made precisely. They are not difficult, but an amateur “playing lawyer” based on “common sense” can cost hundreds of thousands of dollars. Can create such an enormous tax liability that it forces you, the heirs to immediately sell the property to pay the tax bill.

There is nothing macabre about this, with all due respect. The end of life is a certainty, just not the time.

What IS a massive problem and leads to incredible difficulties is for a parent to pass with sloppy will/trust papers, non-perfected (or NO) POAs to the various institutions where accounts may be located, with poorly written, ambiguous instructions as to the disposition of the estate, with siblings and heirs having different understandings of what is to be. THAT is a mess, Guaranteed.

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