In California,if there is an unrecorded grant deed from parents to children, would the property still have to be probated?
2 Answers from Attorneys
The validity of the unrecorded Deed depends on a variety of factors, including any other deeds or liens recorded after the date of your unrecorded document. You need to consult with an attorney who can review the document and a title report and advise you of your legal rights.
First, as Mr. Feldman indicates, the validity of the deed and its priority in record title would have to be evaluated. Assuming it is valid, and there were no other assets that would need to be subjected to probate, then yes, the deed could just be recorded and probate skipped. BUT that could have very serious negative tax consequences.
When real property transfers from parents to children by deed, whenever the children go to sell the property, they must pay capital gains taxes on the property based on the gain in value from the price the parents paid for it. If it passes by will, trust or intestate probate, the children will only have to pay capital gains tax on the increase in value from the date of the parent's death.
So even if the deed is good, you have to evaluate whether a probate will cost more or less than the extra taxes you will have to pay if ownership passes by deed.