Legal Question in Real Estate Law in California

Putting childrens name on parents deed

Parents are 90 & 91. They own home free and clear. Should we put our names slong with theirs on the deed. If so, which way is best? What if one becomes incapcitated instead of a death?

Asked on 1/19/09, 2:10 pm

5 Answers from Attorneys

George Shers Law Offices of Georges H. Shers

Re: Putting childrens name on parents deed

First of all, you should not pressure your parents to do something thta is solely for your benefit and not for them. Be sure they really want to do what you propose; one way to be sure is to have a neutral person discuss it with them.

When a person dies, the portion of the property they own has the basis [the costs that are deducted from the gross profit] increased to the fair market value at the time of death. Even with the value of property having dropped greatly, if your parents bought their home more than 10 years ago the paid much less than its current value. Unless you plan to live in that house until you die, transferring a portion over to you now results in a large increase in capital gains taxes.

Spend the money to speak to an attorney who specializes in trusts, estates, and the tax consequences of both.

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Answered on 1/19/09, 4:26 pm

Joel Selik

Re: Putting childrens name on parents deed

If you put your names on the deed and if there are increases in value of the property from the time your parents acquired the property, you have a risk of having increased income taxes on the sale of the property after they pass.

They should consider a trust and durable powers of attorney.

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Answered on 1/19/09, 4:32 pm
Robert F. Cohen Law Office of Robert F. Cohen

Re: Putting childrens name on parents deed

It's best to speak with an estate planning attorney. The property could be held in a trust. That way there might not be any problems related to joint tenancy. Also, you should discuss with the attorney obtaining powers of attorney for both health care and financial affairs.

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Answered on 1/19/09, 2:27 pm
Robert Johnston Law Offices of Robert J. Johnston

Re: Putting childrens name on parents deed

Putting your names on the deed is a great way to avoid probate and save time and money later. You can do it with certain legal language such as Joint Tenants with Rights of Survivorship, or even more thorough would be to simply put the deed exclusively in your names. If someone becomes incapacited before death it can become a real headache because now you would need to have someone legally appointed as their representative. Please call if you have any questions. Robert Johnston

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Answered on 1/19/09, 2:34 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Putting childrens name on parents deed

Your question states that California law applies, but the user location is South Carolina. Therefore, I'm assuming the 90 and 91 year-old parents and the house are in California. The applicable law is probably the law of the state where the house is.

Technically, one does not put names "on the deed" - you mean "on the title." A deed is the instrument by which changes to title are made.

I tend to agree with Mr. Cohen and to disagree with Mr. Johnston. Family circumstances differ, and while it is true that making a gift of ownership while the parents are still living, either directly or by setting up a joint tenancy, does avoid probate, it does not avoid certain taxes that can readily and leaggly be avoided by allowing the property to be inherited rather than received as an inter vivos (during life) gift. Taxes avoided are the gift tax (at time of giving) and capital gains tax (when the appreciated property is ultimately sold). These taxes can be very high and unnecessary.

Families should consider setting up a living trust. This will avoid the taxes (for the most part, and for most families) and also avoid probate. The best of both worlds. The price is a modest fee to an estate-planning attorney to draw up the trust and handle the paperwork to fund the trust. Occasionally, a trust is not the best choice, possibly where the property has depreciated and/or the estate tax liability is high, but for 97% or so of families there is a huge estate and family wealth advantage to setting up a trust (or for a couple, perhaps a coordinated pair of trusts) and also a durable power of attorney for health care as part of the package.

This is not an advertisment; I don't practice this area of law.

Finally, keep in mind that California is a coomunity-property state and its laws affecting the property and affairs of a married couple differ rather substantially from those of South Carolina.

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Answered on 1/19/09, 3:56 pm

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