Episode 65: Why You Should Beware of Tax Advice Via Social Media
Episode 65
Host: Jill Mastroianni
Why You Should Beware of Tax Advice Via Social Media
A viral Instagram reel claims California’s Proposition 19 “hijacks your kids’ inheritance.” In this Tuesday Triage episode, Jill walks through the facts behind the fear. Using a real-world example, she explains how California property taxes actually work, what changed under Proposition 19, and why federal tax rules like step-up in tax basis still protect many beneficiaries. This episode is about slowing down, adding context, and replacing social-media sound bites with real understanding.
What You’ll Learn in This Episode
Why estate-planning advice from social media can be misleading without context
The difference between property taxes and capital gains taxes
How Proposition 13 created predictable property-tax increases in California
What Proposition 19 changed about parent-to-child property transfers
How reassessment works when real estate is inherited
The primary residence exception under Proposition 19
Filing requirements for the parent-child reassessment exclusion
Why step-up in tax basis remains a powerful tax benefit when inheriting property
Financial options after inheriting a home, including selling or renting
What property taxes actually fund in local communities
Resources & Links
Tennessee Estate Planning Services: https://www.deathreadiness.com/estate-planning-solution
True Hustle Podcast YouTube Clip re: Proposition 19: Start at 2:35 https://www.youtube.com/watch?v=Az1bbDbiYRo
Proposition 19: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200ACA11
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
Learn more about Jill’s solutions
Subscribe to the Death Readiness Dispatch!
Submit a question for Tuesday Triage
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There’s a constitutional amendment in California that will hijack your kids’ inheritance! Or, at least that’s what a viral social media clip would have you believe. After a friend texted me a viral Instagram reel about California’s Proposition 19, I decided to dig into the facts behind the fear. Today, we walk through a real-world example of inherited property, reassessment, and the tax rules most people misunderstand. Because estate planning is rarely as simple, or as scary, as a social media sound bite.
Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.
I spend a lot of time thinking about how people learn about estate planning.
Twenty years ago, most people learned from attorneys or financial advisors.
Ten years ago, they learned from Google searches.
And now? Maybe it’s Instagram reels.
And the problem with learning estate planning from a 20-second clip is that estate planning is almost never a 20-second topic. Complex tax or inheritance rules don’t fit neatly into sound bites.
And lately, I’ve been thinking about this even more because I’ve returned to something familiar — the practice of law.
After a year of building The Death Readiness Podcast and creating tools like The Death Readiness Playbook, I’ve reopened my estate planning practice, serving Tennessee clients remotely from my home in Michigan.
I love bringing two parts of my work together — education and legal practice — because sometimes families need more than information. They need someone to help turn decisions into documents.
But for today, let’s focus on the information and answer a question I got from my friend Lauren last week.
Her parents sent her an Instagram reel that played to their fear that California’s Proposition 19 would ruin Lauren’s inheritance. Lauren forwarded it to me with a message that said, “For the pod: Can you explain what Proposition 19 is and what the real consequence is?”
And that’s today’s Tuesday Triage question.
Let’s start with the reel that caught Lauren’s parents’ attention. It came from a clip of Episode 139 of the True Hustle Podcast, titled Should You Buy or Rent in 2026? I’ll link to it in the show notes.
But first, I’m going to reenact the short exchange from the clip Lauren is asking about.
The host, JR Jimenez, is a real estate agent, and his guest was mortgage broker Minh Nguyen.
Here it is:
JR: I want you to try and explain Proposition 19 in less than 60 seconds.
Minh answers: It’s hijacking Californians’ legacy. If you broke your back to buy a house or buy multiple homes in California, Prop 19 pretty much puts that to an end because only your owner-occupied property that when you pass away your child inherits, they have to move in within the first year to receive the tax break. If not, they don’t get the tax break. So imagine you bought something for $100,000 now you pass away it’s worth like 2 million, your kid, unless they move in it right away within the first year, they’re going to pay the tax on the 2 million. Who would want that?
Think about it, like yourself, you bought all these investment properties and now every property’s taxed on the new value, not on the value you bought it for. So your kid, when they inherit the property, the only way they can keep up with the taxes, think about it, even if you rent it out, the taxes alone eat up the rent. So it’s hijacking your inheritance, your kids’ inheritance. If you’re a Californian, Prop 19 hijacks your kids’ inheritance.
Here’s JR again: California Prop 19 hijacks your kids’ inheritance. The number one rebuttal in the comments section. Put it in a trust, bro.
Minh answers: It doesn’t protect it from a trust. Trust will protect probate.
Here’s JR again: Come on, dog. So, I was right.
Minh responds: Yeah, you’re right.
First, I want to say something important. This is a very popular podcast, and live podcast conversations are hard. You’re talking in real time. You’re not reading from a script, and sometimes what comes out isn’t as precise as you’d like it to be.
I say this with empathy because I host a podcast, too.
But both the host and the guest are also content creators. And content creators know the value of a strong sound bite.
The sound bite here is:
“If you’re a Californian, Prop 19 hijacks your kids’ inheritance.”
The YouTube caption goes even further:
“California is stealing your kids’ inheritance.”
That’s powerful language. And it’s designed to get attention.
But, when I’m consuming information, especially about taxes or estate planning, I care about two things: facts and context.
And sound bites rarely deliver either one.
If you’re learning by scrolling, like a lot us do, it’s important to pause and ask:
What’s missing here?
What’s the full story?
We’ve already gone one step further than the Instagram reel Lauren’s parents saw. We listened to my reenactment of the longer podcast clip it came from.
But we still don’t have enough information to understand what Proposition 19 actually does.
So let’s slow this down and walk through it together.
What is Proposition 19?
California Proposition 19 is an amendment to the California state constitution. It was approved by voters in November 2020 and took effect on February 16, 2021. So while an Instagram reel might have recently caught Lauren’s parents’ attention, this law has already been in place for five years.
Proposition 19 reshuffled a property-tax benefit. It gave a tax benefit to one group of homeowners and, in order to do that, took a tax benefit away from another group. Both the benefit and the loss center around California real estate and property taxes.
And I want to pause here to make one thing very clear.
Proposition 19 is about property taxes, the taxes homeowners pay each year based on the assessed value of their property.
We are not talking about capital gains taxes that might apply when someone sells a home. These are completely different taxes, and the distinction matters a lot.
Here’s why.
Proposition 19 changed a property-tax rule that used to benefit children who inherited, or were gifted, real estate from their parents.
But Proposition 19 did not change the federal income-tax rules that apply when someone inherits property. And I’ll come back to that later.
First, let’s briefly talk about the group Proposition 19 was designed to help.
The law benefits homeowners who are over age 55, severely disabled, or victims of wildfire or natural disasters. It allows qualifying homeowners to move anywhere within California and transfer the taxable value of their primary residence to a replacement home of equal or lesser value.
We’re not going to go deep into that part today, because it’s not the focus of Lauren’s question. I just want you to understand the broader context.
Now let’s move to the group that lost a tax benefit, the children of California homeowners who receive real estate by gift or inheritance.
That’s the part Lauren’s parents are worried about.
And before we get into the weeds of Proposition 19, I want to make sure we all understand how property taxes work in California.
Property taxes are based on the assessed value of real estate. That assessed value is determined by the County Assessor. California has 58 counties, which means there are 58 county assessors. Property taxes are then paid to the County Tax Collector.
Now here’s the part that really matters.
In California, property is generally taxed at 1% of its assessed value, and that assessed value can increase by no more than 2% each year.
When someone purchases property, the purchase price becomes the assessed value.
Let’s look at an example.
My friend Lauren, who asked today’s question, lives in Half Moon Bay, California. Let’s say I’m house hunting there and I find a home I love for 1 million dollars.
I buy the house for 1 million dollars. That purchase price becomes the assessed value.
Property taxes are 1% of that assessed value, which means my property taxes in the first year are $10,000.
For today’s example, I’m going to keep the math simple and stick with a flat 1% property tax rate.
In reality, though, property tax bills are usually a little higher than that. On top of the 1% base rate, there can be voter-approved local bonds and special assessments.
Local bonds might fund things like school construction or public safety facilities. And special assessments are charges for services tied directly to the property, things like garbage collection, water, or sewer services.
So while the base property tax rate is 1%, the actual bill you receive may be slightly higher.
Let’s get back to our example.
I buy a house in Half Moon Bay, San Mateo County, for 1 million dollars. When I purchase the property, it’s reassessed for property tax purposes, and the assessed value becomes the purchase price — 1 million dollars.
Property taxes are 1% of that assessed value, which means my property taxes in the first year are 10,000 dollars.
Now remember, the assessed value can increase by no more than 2% per year.
So what does that look like in practice?
In year two, the assessed value increases from 1 million dollars to $1,020,000. Property taxes are still 1% of the assessed value, so my property taxes increase to 10,200 dollars.
That’s just a $200 increase from the prior year.
The 1% property tax rate and the 2% cap on annual assessment increases were established by Proposition 13, and they create something homeowners value a lot: predictability.
Even if the market value of the home rises much faster than 2% per year, which often happens in California, the taxable value of the property can only increase by that capped 2% amount.
And that’s important. When you buy a home, you want a general sense of what property taxes will look like in the future. Proposition 13 gives homeowners a predictable range for those increases, making it easier to plan and budget over time.
But today’s Tuesday Triage question isn’t about Proposition 13. It’s about Proposition 19 and whether it really “hijacks your kids’ inheritance.”
The general rule in California is that real estate is reassessed for property tax purposes when a transfer occurs. A transfer includes selling property, gifting property, or the death of an owner.
And this is a big deal.
If a homeowner has owned property for 30 years, the fair market value of that property has often increased far more than the 2% annual cap on assessed value increases.
Before Proposition 19, there was an exception that allowed parents to transfer real estate to their children without triggering reassessment for property tax purposes.
That exception created a very significant tax benefit for children inheriting California real estate.
Let’s walk through an example.
Suppose Lauren’s parents purchased their home in 1996 for $500,000. The assessed value at that time would be $500,000, and property taxes at 1% would be $5,000 for that first year.
Now let’s assume the assessed value increased by the maximum 2% each year for 30 years. By 2026, the assessed value would be about $900,000, which means property taxes would be roughly $9,000 annually.
So far, everything is predictable under Proposition 13.
And this is where Proposition 19 starts to matter.
If Lauren’s parents died in 2026 and left the property to Lauren, their death would count as a transfer.
Under the general reassessment rule, the property’s assessed value would reset to its fair market value at the time of the transfer. At death, the County Assessor reassesses the property to what it believes is its current market value.
If the home is now worth $2 million, the new assessed value becomes $2 million.
Property taxes are still 1% of assessed value but now Lauren’s annual property tax bill would be about $20,000.
That’s more than double what her parents were paying for the same house.
Before Proposition 19, Lauren could have inherited the property without reassessment and continued paying property taxes based on her parents’ assessed value, with only the 2% annual increases.
That difference is what has people upset.
Are there any exceptions? Is there any way Lauren can step into her parents’ shoes when it comes to property taxes?
Yes, there is a limited exception.
If Lauren moves into her parents’ home within one year of their deaths and uses it as her primary residence, she may qualify for a $1 million reassessment exemption.
The primary residence exemption for inherited property in California exists to protect family homes from large property-tax increases when they pass from parents to children but only when the home continues to be used as a primary residence.
Before Proposition 19, children could often inherit real estate, including second homes and rental property, and keep their parents’ low property-tax value. The state saw this as creating inequities in the property-tax system.
Proposition 19 narrowed the rule so the benefit now focuses specifically on keeping families in inherited homes, not on preserving low taxes on inherited investment property.
The 1 million dollar exemption amount adjusts for inflation — in 2026 and 2027, it’s 1,044,586 dollars — but to keep the math simple, I’m going to use $1 million.
Let’s walk through this.
Lauren’s parents purchased their home for $500,000 about 30 years ago. After annual 2% assessment increases, the property’s assessed value in 2026 is about $900,000.
The home’s fair market value, however, is $2 million.
Under the Proposition 19 exception, we compare Lauren’s parents’ assessed value plus the $1 million exemption to the fair market value.
So we take:
Lauren’s parents’ $900,000 tax assessed value and add the $1,000,000 primary residence exemption amount for a total of $1.9 million
Then we compare that to the fair market value of $2 million.
The difference is $100,000.
That difference gets added back to Lauren’s parents’ assessed value:
$900,000 + $100,000 = $1 million assessed value for Lauren.
That means Lauren’s property taxes would be about $10,000 in her first year of ownership, as long as she makes the home her primary residence.
Now, you might be thinking: okay, so Lauren just moves in and she’s done?
Not exactly. And this is where things get a little messy.
Here are the core requirements under Proposition 19:
First, Lauren must occupy the home as her primary residence within one year of her parents’ deaths.
Second, she must file Form BOE-266, the homeowner’s property tax exemption claim, within that same one-year window.
Third, she must file Form BOE-19-P, the parent-child reassessment exclusion claim, with the county assessor within three years.
Earlier I mentioned that California has 58 counties, and that matters here. Implementation varies from county to county. The documentation required to prove primary residence can differ, and some counties monitor continued occupancy more closely than others.
If I were in this situation, I would absolutely hire a California property tax attorney to make sure everything was done correctly and on time.
But what if Lauren doesn’t want to move into her parents’ home? Does she have other options?
Yes. She could sell the house and take the cash. And because of another tax rule that still exists, that’s actually a very strong option.
Up to this point, we’ve been talking entirely about property taxes. But I don’t want us to get tunnel vision, because there’s another tax that matters here: capital gains tax.
Capital gains tax applies to profits from selling an asset, like real estate.
Under current federal law, when someone dies, most of their assets receive a step-up in tax basis to their fair market value at the date of death. Technically, there can also be a step-down in tax basis if the asset is worth less than when it was purchased, for example, during a housing downturn, but the concept is the same.
Tax basis is the starting value the IRS uses to determine whether you made money on an asset. Usually, tax basis begins with what you paid for the asset, plus the cost of major improvements.
When you sell the asset, the difference between the sales price and your tax basis determines whether you owe capital gains tax.
Let’s apply that to Lauren.
Her parents purchased their home in 1996 for $500,000, and today the home is worth $2 million.
If Lauren’s parents die in 2026, Lauren inherits the home with a stepped-up tax basis of $2 million.
If she sells the home for $2 million, there is no capital gain — and therefore no capital gains tax.
Lauren receives the full $2 million in cash, which she can use however she wants.
Another option would be to keep the property and rent it out. Rental income would help offset the higher property taxes after reassessment.
So if Lauren’s parents still own this home when they die, I will absolutely be there for my friend Lauren as she grieves the loss of her parents. But financially? I won’t be worried about her.
She will have inherited a $2 million asset.
The focus of today’s Tuesday Triage was property taxes. So I think it’s worth remembering what property taxes actually pay for.
Property taxes primarily fund local services, especially public schools. They also support police and fire departments, road maintenance, libraries, parks, sanitation services, and the infrastructure that keeps communities functioning day to day.
In other words, property taxes aren’t just a bill. They’re part of how communities take care of themselves.
So if Lauren does end up paying higher property taxes one day, those dollars will be supporting the community where her parents built their life and where she now owns property.
And that doesn’t feel like inheritance being hijacked to me. That feels like inheritance continuing to serve a purpose.
Because inheritance isn’t just about money; it’s about what continues after someone is gone.
And if you’re listening from Tennessee and ready to create a plan that reflects what you want to continue after you’re gone, I’m now offering estate planning services for Tennessee families. Visit deathreadiness.com or email me at jill@deathreadiness.com to learn more.
And if you have a question you’d like me to answer on a future Tuesday Triage episode, submit it at deathreadiness.com/tuesdaytriage. That’s deathreadiness.com/tuesdaytriage. The link is in the show notes.
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
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