What Happens When You Inherit a House in California?

What Happens When You Inherit a House in California? First, figure out how the house legally passes to you. It

What to Do When Your Income Changes If your income changes, start by figuring out whether this is a temporary

How to Access Cash Without Selling Your Investments

How to Access Cash Without Selling Your Investments You can access cash without selling investments by using strategies like a

What Happens When You Inherit a House in California?

First, figure out how the house legally passes to you. It may transfer through a trust, joint ownership, a transfer-on-death deed, or probate.
Expect to revisit the property tax bill. California’s Proposition 19 rules can trigger reassessment, even when a house passes from parent to child.
Get a date-of-death value for the property. Your tax basis will generally be tied to that value, which can make a big difference if you sell.

Will Inheriting Property Be a Boon or a Bust?

You may have known for years that you were going to inherit a property when someone died. That property might have generated income that paid for your parent’s long-term care expenses or provided income to someone who had little other resources.

You might be excited about the prospect of being the beneficiary of that asset and its income. Or maybe you’re excited to be able to move into this house and call it your own. This might be the only way you can afford to own a home.

Before you get too excited, there’s much to consider when inheriting a piece of real estate. The rules that applied to the person who gave you this home might not apply to you. Going into this acquisition with eyes wide open will serve you well.

How Does an Inherited House Pass to You in California?

An inherited house doesn’t always become yours the moment someone dies, no matter what the dead person said before dying. How it transfers depends on the deed, the estate plan, and how the property was owned.

This is the first thing you will have to sort out before even considering selling, refinancing, or moving in.

A home held in a living trust may pass through the trust. Property owned in joint tenancy can pass to the surviving owner. Someone might have the right to live in it for the rest of their life. The house may need to go through probate.

Be careful not to jump to the conclusion that being named in a will or trust gives you immediate control over the property. It may not. Before anyone calls a Realtor or starts making plans for the house, confirm who actually has authority to act.

What Happens to Property Taxes When You Inherit a California Home?

This might be your biggest (and nastiest) surprise. The property taxes on this property may change after you inherit it. Proposition 19 narrowed the circumstances in which children can keep a parent’s existing property tax assessment, and you’ll want to understand how it works.

Proposition 19 Changed the Parent-to-Child Rules

A lot of people still assume that if Mom paid property taxes based on a decades-old purchase price, her children will simply keep paying roughly the same amount. That is no longer a safe assumption.

California voters passed Proposition 19, which went into effect on February 16th, 2021. That changed the property tax rules for most people inheriting real estate.

For a parent-to-child transfer to qualify for the current family home exclusion, the home needed to have been the parent’s primary residence and within a year must become the primary residence of the person who inherited it. Otherwise, the whole property gets reassessed.

The numbers matter too. For qualifying transfers from February 16, 2025, through February 15, 2027, the indexed exclusion amount is $1,044,586. If the property’s market value exceeds the parent’s taxable value plus the applicable exclusion, that portion will be reassessed and the property taxes will likely increase.

That can change the economics of keeping the house.

A home that looked inexpensive to hold based on your parent’s old tax bill may look very different after reassessment. I would want that number before deciding the property is a keeper.

Will You Owe Capital Gains Tax on an Inherited House?

You may owe capital gains tax when you eventually sell, but you generally don’t inherit the previous owner’s original purchase price as your tax basis. Your basis is usually tied to the property’s fair market value at death.

The Step-Up in Basis Matters

Suppose your mother bought a Bay Area house for $300,000, and it is worth $1.5 million when she dies.

Your basis will generally be around the $1.5 million date-of-death value, subject to the applicable tax rules. If you sell soon afterward for about $1.5 million, there may be relatively little appreciation to tax.

This is why I would not skip the date-of-death appraisal just because no one plans to sell right away. Years later, reconstructing what a house was worth on a specific date can become a more difficult project.

There is another distinction worth keeping straight. Your Proposition 19 property tax assessment and your income tax basis are not the same calculation. People understandably mix them up, but they answer different tax questions.

Do You Pay Inheritance Tax on a House in California?

California doesn’t impose an inheritance tax on the person receiving the house. Receiving the property also generally doesn’t create income tax simply because you inherited it.

That sounds like the end of the tax conversation, but it’s not.

You can still face a higher property tax bill after the transfer, and you may have capital gains when you later sell. Larger estates can also have separate federal estate tax issues.

What Happens If the Inherited House Has a Mortgage?

The mortgage doesn’t disappear when the owner dies. Before making plans for the house, find out what is owed, who is servicing the loan, and what it costs to keep the property each month. Generally speaking, a lender will not call the mortgage due and require you to pay it off if you have inherited the property. No matter what, you need to keep paying the mortgage on time.

This is one of the more mundane parts of inheriting a house, but it can drive the decision.

Should You Keep, Rent, or Sell an Inherited House?

There is no automatic best choice. The right answer depends on the property’s real carrying costs, its tax treatment, your other assets, and whether you would choose to own this house if you were starting from scratch.

Know your numbers

You want to calculate the actual carrying costs, which include:

Mortgage payment
Property taxes
Homeowners insurance
HOA dues
Utilities
Routine maintenance
Repairs that have been deferred

A house can have $1 million of equity and still be uncomfortable to carry.

That’s easy to miss when everyone is focused on what the property is worth. If the estate takes time to settle, or siblings are still deciding what to do, somebody may be writing checks for months before there is a long-term plan.

Keeping the House

Here is the question I find most useful.

If you had inherited the same amount in cash instead, would you use it to buy this house today?

That doesn’t erase the emotional side of the decision. A family home is not just another line on a balance sheet. However, the question helps separate the house you remember from the asset you would be choosing to own now.

Look at the new property tax bill, maintenance, location, insurance, and how much of your net worth would end up concentrated in one property.

Renting the House

Renting out the house can sound attractive until you run the full numbers. If you plan to use a property manager, include that cost too.

Start with expected rent, then subtract property taxes, insurance, management, maintenance, vacancy, and the occasional large repair. A roof, sewer line, or HVAC replacement has a way of changing an elegant spreadsheet.

Also confirm the Proposition 19 consequences before assuming renting is the obvious compromise. Most rental properties are reassessed to full market value unless other provisions have been put in place to avoid this situation.

Selling the House

Selling may be the cleanest answer when the property doesn’t fit your life, requires more cash than you want to put into it, or leaves too much of your wealth tied to one piece of California real estate.

Sometimes people worry that selling means they are giving up something emotionally important. I would separate those two ideas. You can value what a home means to your family without deciding that you need to own it indefinitely.

What If You Inherit the House With Siblings?

When siblings inherit together, the math is often easier than the family dynamics. One person may want the house, another may want cash, and a third may be open to renting it.

Do not start with who “deserves” what. Start with a credible property value and a clear picture of the costs.

If one sibling wants to buy out the others, work through the valuation, financing, taxes, and ownership transfer before agreeing on a price over dinner.

The house may be a family asset, but the buyout is still a financial transaction. Treating it that way can make the family conversation easier.

What Should You Do First After Inheriting a California House?

Before choosing what to do with the house, get control of the facts. Confirm who owns it, what it is worth, what it costs to carry, and how the transfer affects the taxes.

I would start here:

Find the deed, trust, will, mortgage statement, insurance policy, and property tax bill.
Confirm who currently has authority to act for the property.
Get a reliable date-of-death valuation.
Find out whether the property will be reassessed under Proposition 19.
Calculate the real monthly and annual carrying costs.
Talk through the tax consequences with your CPA.
Review the keep, rent, and sell options in the context of the rest of your financial plan.

You don’t have to decide everything in the first few weeks. However, there is a difference between giving yourself time and putting off the financial homework.

If you’ve inherited a home in California and are not sure whether keeping it, renting it, or selling it makes the most sense, I can help you look at the numbers and how the property fits into the rest of your financial life. Sometimes getting clear on the tradeoffs is enough to make the next step much easier.

Jessica Lanning, CFP®

Email: [email protected]
Phone: (415) 354-5699
LinkedIn: linkedin.com/in/jessicalanning
YouTube Channel: Lanning Financial on YouTube

Lanning Financial Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

What to Do When Your Income Changes

If your income changes, start by figuring out whether this is a temporary disruption or a more permanent change so you can decide whether you need a short-term adjustment or a bigger reset.
Review your cash flow, benefits, savings, debt, and upcoming large expenses before making major financial decisions from a place of stress.
A short-term income drop usually doesn’t derail a long-term plan, but it may require pausing, delaying, or reshaping goals until the next chapter becomes clearer.

Your Income Changed. Now What?

Many people are asking some version of this question right now.

I’m making less money. I just took a lower-paying job. I’m out of work. I want to take six months away from work for a project, caregiving, or just to breathe. What does that mean for my financial plan? Am I still going to be okay?

First, breathe. And keep breathing.

An income change can feel scary, especially when you have been operating from a certain set of assumptions for a long time. But a lower-income period doesn’t automatically mean your plan is broken. Very often, it means the plan needs to be updated.

Recent Federal Reserve research found that 30% of adults had income that varied at least occasionally during the year, and 11% struggled to pay bills because their income varied. Job security was also top of mind, with 42% of adults saying they were worried about finding or keeping work.

So, if income feels less predictable right now, you are not imagining it, and you are not alone. The question is what to do next.

First, Figure Out What Kind of Income Change This Is

Not every income drop requires the same response.

A temporary income drop is one thing. Maybe you lost a job and expect to find another one. Maybe you are taking unpaid leave, your business slowed down for a few months, or you’re intentionally stepping away from work for a season.

A lower-paying but intentional change is another thing. The new job could pay less but give you more flexibility, less stress, more time with your family, or a better version of daily life.

A long-term or permanent income loss is different. Disability, the death of a spouse, a lasting business decline, or a career change that permanently lowers income can have a much bigger impact.

Before you start making cuts or second-guessing everything, name the situation honestly. Is this a chapter, a transition, or a new long-term reality?

The answer shapes the plan.

Short-Term Income Loss Usually Calls for Recalibration, Not Panic

In my experience, a short-term job loss or temporary income decrease is usually not fatal to a long-term financial plan.

You may need to pause a remodel, make the current car work for another few years, rethink the big vacation you were planning, or slow down extra savings temporarily while you get through the transition.

That’s not the same as giving those things up forever.

You are often just moving them to a different year, changing the scope, or giving yourself time to see what happens next.

There is also some data to support the idea that job loss doesn’t always become a permanent setback. The Bureau of Labor Statistics reported that among long-tenured displaced workers who were reemployed full time, 62% had earnings that were as much as or greater than what they earned in their lost job.

Not everyone lands quickly or at the same income. Some people need a deeper reset. But it’s a useful reminder that a disruption isn’t always the end of the story.

Look at What Actually Needs to Change

When income drops, the first instinct is often to look at everything at once. That can get overwhelming very quickly.

Instead, start with the decisions in front of you.

Do you have a major purchase coming up? A remodel? A car? Tuition? Travel? A move? Are you planning to support an adult child or aging parent? Are you counting on income that may not arrive when you expected?

Those are the places to look first.

Some decisions can wait or you can adjust them. Others may still make sense, but not right now.

This is where financial planning can create relief. You don’t have to decide that the remodel is gone forever. You might decide it happens two years from now instead of this year. You don’t have to decide that the vacation is irresponsible. You might decide it needs to look different this time.

The goal is to separate what matters from what is simply scheduled.

Revisit Cash Flow Without Turning It Into Punishment

When your income changes, you need to look at cash flow. But I don’t think that it should feel like punishment.

This is not the moment to beat up on yourself for earning less. Instead, you want to relook at your spending and make sure it aligns with your values.

Start with what’s coming in now. Then look at what’s going out. Separate fixed expenses from flexible ones. Notice what is essential, what is discretionary, and what can pause for a period of time.

Rather than tell yourself a story about how awful this is, tell yourself a story about how you know how to do hard things, that you are resilient, that you are figuring it out, that this is not permanent, and that ultimately you are doing the best thing for you for today and for 10 years from now.

Also look at the benefits. If your job changed, did your health insurance change? Did retirement contributions stop? Did stock compensation, bonuses, or employer-paid benefits shift? These details can matter as much as the salary number.

Then look at savings. How long can your cash reserves support this chapter? Do you need to use them? If so, how much and for how long?

Use the Pause to Recheck Your Priorities

Sometimes an income change does more than shift the numbers. It changes the conversation.

We can get on the hamster wheel at work and just keep going. More income, more spending, more commitments, more expectations. Then something interrupts the pattern, and suddenly you have a chance to ask better questions:

Do I actually want the kitchen remodel right now?
Do I want the higher-paying job if it means I never see my kids?
Am I spending in ways that have heart and meaning for me, or am I just keeping up with what I thought I was supposed to do?

A lower income is not a failure. Sometimes it comes with something valuable, like more time, less stress, more creative freedom, or a life that feels more aligned.

Run the Numbers Before You Assume You Are Off Track

This is where a financial plan becomes really helpful.

If you are already working with a financial planner, that person should be able to update your plan with the new income assumption and show you the impact. What happens if you make less for six months? What happens if the lower income lasts two years? What happens if you save less temporarily but restart later?

There are answers to these questions.

Sometimes clients come in worried that everything has changed, and when we run the numbers, the answer is much more manageable than they feared. Maybe retirement still works, but the big goal needs to move back a little. Or one choice needs to change, but the whole plan does not.

Seeing the impact in your own numbers can create a lot of relief.

It also helps couples and families talk about the situation with less blame and more context. When everyone is guessing, tension can rise quickly. When the numbers are visible, the conversation becomes more grounded.

When an Income Change Needs a Bigger Plan

There are times when an income change deserves more than a temporary adjustment.

If the lower income is likely to be permanent, the plan needs to reflect that. If the change involves disability, the death of a spouse, divorce, extended unemployment, loss of benefits, or ongoing family support obligations, it is worth taking a deeper look.

The same is true if the income change is creating conflict at home. Money stress can bring out very different fears in different people. One person may want to cut everything immediately. Another may want to keep life feeling normal for as long as possible.

Neither reaction is unusual, but it helps to have a shared view of the facts.

A bigger plan may include adjusting spending, changing savings targets, revisiting insurance, rethinking retirement timing, evaluating debt, or deciding which goals still fit the life you want now.

This Is a Chapter, Not the Whole Story

An income drop can feel unsettling because it challenges the plan you thought you were living inside. But a change in income doesn’t automatically mean you are off track.

Sometimes it means you need to pause. Other times it means you need to delay a few things or redefine what success looks like in this season of life.

When you can look at the numbers, understand the tradeoffs, and make decisions from clarity instead of fear, the situation usually feels much more manageable.

If your income has changed and you want help understanding what it means for your financial plan, I invite you to start with my short questionnaire. It is a simple way to share what has shifted and see whether working together could help you move forward with more clarity and confidence.

Jessica Lanning, CFP®

Email: [email protected]
Phone: (415) 354-5699
LinkedIn: linkedin.com/in/jessicalanning
YouTube Channel: Lanning Financial on YouTube

How to Access Cash Without Selling Your Investments

You can access cash without selling investments by using strategies like a securities-backed line of credit, which lets you borrow against eligible assets in a taxable investment account.
This approach can help you avoid triggering capital gains, selling at the wrong time, or disrupting a portfolio you still want to hold.
Borrowing against investments can be useful for short-term cash needs, but it should have a clear purpose, repayment plan, and understanding of the risks.

When You Need Cash but Don’t Want to Sell

Sometimes you need cash, but selling investments doesn’t feel like the right move.

Maybe you are buying a car, starting a home project, covering a tax bill, or bridging a temporary cash-flow gap. You have money invested, but you don’t necessarily want to sell those investments just because you need access to cash right now.

Selling investments can create taxes. It can disrupt a portfolio. It can also force you to sell something you still want to own, possibly at a time when you would rather leave it alone.

That’s why many people want to know if there’s another way to access cash without disrupting the rest of the plan. One option is a securities-backed line of credit, often called an SBLOC.

What Is a Securities-Backed Line of Credit

A securities-backed line of credit is a line of credit secured by assets in a non-retirement investment account. FINRA describes it as a revolving line of credit that lets you borrow money using securities in your investment account as collateral.

Think of it a little like a home equity line of credit, or HELOC. With a HELOC, you are borrowing against the equity in your house. With an SBLOC, you are borrowing against eligible securities in an investment account.

You are not selling the investments. You are borrowing against them.

The amount you can borrow is based on the value of the account and the type of investments inside it. A portfolio with more conservative holdings may support a different borrowing amount than one with more volatile or concentrated positions. The interest rate and terms can also vary depending on the institution, the size of the line, and the amount borrowed.

These lines are generally tied to taxable brokerage accounts, not retirement accounts. That distinction matters because retirement accounts have their own rules and limitations.

Why Someone Might Use an SBLOC Instead of Selling Investments

The biggest reason people consider an SBLOC is because they need cash, but they don’t want to sell.

Let’s say you need $50,000 to buy a car. You could sell investments to raise the cash. But maybe those investments have appreciated, and selling them would trigger capital gains. Maybe you own a stock you still believe in. Maybe the market is down, and selling right now feels poorly timed.

I can already hear the Apple and Nvidia people saying, “Sell my stock to buy a car? Absolutely not.”

That’s where an SBLOC can be useful. It may allow you to borrow against the value of the account, use the cash for the expense, and keep the investments in place.

This can be especially helpful when the need is temporary. Maybe you are waiting for a bonus, selling another asset, receiving income later in the year, or trying to manage cash flow without creating a tax event.

In the right situation, an SBLOC can act almost like a backup reserve. However, it’s not your emergency fund, and it shouldn’t replace thoughtful cash planning. But it can be another source of liquidity if you need access to money quickly and do not want to sell investments immediately.

When an SBLOC Can Make Sense

An SBLOC is usually best as a short-term or strategic cash-flow tool.

It may make sense for things like:

Buying a car
Covering a temporary tax bill
Funding part of a home improvement project
Bridging cash flow before a bonus or liquidity event
Avoiding a poorly timed investment sale
Managing expenses during a transition

The key word here is temporary.

I don’t like the idea of using an SBLOC to support ongoing lifestyle spending with no repayment plan. That’s where this can move from strategic to sloppy very quickly.

Debt is not automatically bad. A lot of financial planning is debt management. It’s not only investment management and tax planning. It’s also deciding when borrowing helps your overall financial life and when it adds pressure you don’t need.

An SBLOC can be a very helpful tool when it solves a specific problem and there is a clear plan for paying it down.

The Risks of Borrowing Against Your Investments

This is the part you need to understand before using one.

An SBLOC is convenient, but it’s still debt. The fact that it is tied to your investment account doesn’t make it free money.

The biggest risk is that the value of your investments can fall. If the account drops too much, the lender may require you to add collateral, repay part of the loan, or sell securities to reduce the balance. This can affect your long-term investment goals.

That’s why you generally don’t want to borrow the maximum amount available. Just because the institution will lend you a certain amount doesn’t mean that is the right amount to use.

There is also the issue of interest. Some lines may allow interest to accrue or require interest-only payments. That can feel easy in the short term, but if you are not paying the balance down, the loan can grow over time.

Interest rates may also change. Many lines of credit use variable rates, which means the cost of borrowing can rise.

SBLOC vs. HELOC vs. Selling Investments

An SBLOC is not the only way to access cash. It is one tool among several, and the right choice depends on why you need the money, how long you need it, and what kind of risk you are comfortable taking.

Option	Best For	Main Benefit	Main Risk
Selling investments	A permanent cash need or planned portfolio change.	No debt, no interest, and no repayment schedule.	May trigger capital gains or reduce future growth.
HELOC	Larger expenses, especially home-related costs.	Lets you borrow against home equity.	Your home is the collateral, and the interest rate may change.
SBLOC	Short-term liquidity when you want to avoid selling investments.	Lets you borrow against eligible investments while keeping them invested.	Market declines can create pressure to add collateral, repay the loan, or sell securities.
Credit cards or promotional financing	Smaller short-term purchases.	Easy access and possible 0 percent promotional terms.	Can become expensive quickly if not paid off on time.

When You Should Probably Not Use an SBLOC

There are times when I would be very careful with this strategy.

I would be cautious if you don’t have a clear repayment plan. I would also be cautious if the borrowing is really covering an ongoing spending problem, not a temporary need.

It may not be a good fit if your portfolio is highly concentrated, very volatile, or already taking more risk than you are comfortable with. If a market drop would force you into a decision you don’t want to make, that matters.

I would also pause if the expense itself is not aligned with your broader plan. Borrowing against investments to buy flexibility or solve a short-term cash-flow issue can be very different from borrowing because you don’t want to make a harder spending decision.

Sometimes selling investments is the better answer. Other times using cash is better. And sometimes borrowing is appropriate. The point is to choose intentionally.

Questions to Ask Before Opening or Using an SBLOC

Before you use a securities-backed line of credit, ask yourself:

What is the cash for?
Is this a short-term need or an ongoing expense?
How much can I borrow without pushing the line too hard?
What is the interest rate, and can it change?
What happens if the market drops?
What is my repayment plan?
Would selling some investments actually be simpler?
How does this affect my taxes, debt, and long-term plan?

How a Financial Planner Helps You Decide

This is where planning becomes important. The decision is not just whether an SBLOC is available, but whether using one improves your financial life.

A planner can help you compare selling versus borrowing, look at the potential tax impact, evaluate concentration risk, think through repayment, and decide how much liquidity you really need. A planner can also help you see whether this is a short-term cash-flow tool or a sign that something else in the plan needs attention.

That’s the bigger conversation.

You are not just trying to get cash. You are trying to manage your money in a way that supports your life now and protects your options later.

Liquidity Is Helpful When It Has a Plan

A securities-backed line of credit can be a useful tool. It can help you access cash without selling investments, avoid a poorly timed sale, and manage short-term cash-flow needs more strategically. But it needs guardrails.

It should have a clear purpose and a repayment plan. It should also fit into the rest of your financial picture, including your taxes, investments, debt, and long-term goals.

Use it thoughtfully, and an SBLOC can give you more flexibility. Otherwise, it can create risk you didn’t intend to take.

If you are trying to decide whether to sell investments, borrow against them, or create a better liquidity strategy, I invite you to start with my short questionnaire. It is a simple way to share what you are thinking through and see whether working together could help you move forward with more clarity and confidence.

Jessica Lanning, CFP®

Email: [email protected]
Phone: (415) 354-5699
LinkedIn: linkedin.com/in/jessicalanning
YouTube Channel: Lanning Financial on YouTube