Proposition 58 and Proposition 193 allow transfer of real property from parent (and sometimes grandparent) to child without property tax reassessment

Proposition 58 excludes transfers of real property between parents and children from reassessment .
Proposition 193 excludes transfers of real property from grandparents to grandchildren from reassessment if all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer.

In the State of California, real property is reassessed at market value if it is sold or transferred. This can sometimes result in a dramatic increase in property taxes. However, if the sale or transfer is between parents and their children (or from grandparents to their grandchildren, under limited circumstances) the property will NOT be reassessed (if certain conditions are met) and the proper application is filed in time.

These propositions allow the new property owners to avoid property tax increases when acquiring property from their parents (or from their grandparents). The new owner's taxes are calculated on the established Proposition 13 factored base year value, instead of the current market value when the property is acquired.

The transfers of real property excluded from reassessment by Propositions 58 and 193 are:
1)Transfers of primary residences (no value limit)
2)Transfers of the first $1 million of real property other than the primary residences. The $1 million exclusion applies separately to each eligible transferor.

The value of transferred property counted toward the $1 million exclusion limit is the Proposition 13 value (factored base year value) just prior to the date of transfer. Usually, this is the taxable value on the assessment roll. If a property is under a Williamson Act (open space) or Mills Act (historical property) contract, it is the factored base year value that is counted, not the restricted value.

Transfers via sale, gift, or inheritance all qualify for the exclusion.

Transfer via trust also qualifies for this exclusion. For property tax purposes, the state looks through the trust to the present beneficial owner. When the present beneficial ownership passes from a parent to a child, this is a change in ownership that is eligible for the parent-child exclusion.

However, you are not required to claim this exclusion from reassessment if it doesn't help you.  If the current market value under Proposition 8 at time of transfer has fallen BELOW the transferor's original Proposition 13 factored base year value, the new owner may be better off NOT to claim the exemption and instead accept a new Proposition 13 base year reassessment.  In this case, reassessment can result in LOWER property taxes by locking in the lower market value as the property's new base year value on the date of transfer. Otherwise, the higher original Proposition 13 base year value set under the transferor's ownership would some day be reinstated as market conditions improve over time and at a level higher than they would be if the property had received a new Proposition 13 base year value on the date the property was transferred.

In any case, you should consult with an estate planning expert for advice before claiming this exclusion.