To be or not not be on mother's deed?

[douala]

What is the name of your state (only U.S. law)? California

Mother owns her house free and clear. She has 3 children. Assuming that all children get along, and that Mother would like 3 children to inherit the house at her death, what would the disadvantages be to have her children on the deed of the house now? The thinking is that at her death, the 3 children own the house and there should not be probate and taxes...am I right?

Thanks,

 

[anteater]

What is the name of your state (only U.S. law)? California

Mother owns her house free and clear. She has 3 children. Assuming that all children get along, and that Mother would like 3 children to inherit the house at her death, what would the disadvantages be to have her children on the deed of the house now? The thinking is that at her death, the 3 children own the house and there should not be probate and taxes...am I right? Thanks,

1) Mother would be making a gift to the children. Depending upon the value of the newly-created ownership shares of the children, mother may have a reportable gift - if the value gifted to each child is over $12,000. Whether that means anything depends on the value of reportable gifts that mother has made during her lifetime and what her estate is eventually worth.

2) Rather than receiving a stepped-up cost basis for the entire property when mother passes away, the cost basis of the childrens' shares will be the same as your mother's cost basis. If the property is subsequently sold, that would increase the sales amount subject to capital gains taxes.

3) Someone familiar with CA property taxes will need to respond on any property tax impact.

Depending upon the entire situation, this may be a case where a revocable living trust makes sense.

 

[nextwife]

And what if one has any lawsuits, liens or judgments filed against them? Gets divorced? What if mom gets remarried and they want to combine their equity into one home together? What if mom at some point wants to sell and buy a different house? What if one sibling has legal/financial trouble some day ,needs cash and sues to "get" their share of the house?

 

[anteater]

And what if one has any lawsuits, liens or judgments filed against them? Gets divorced? What if mom gets remarried and they want to combine their equity into one home together? What if mom at some point wants to sell and buy a different house? What if one sibling has legal/financial trouble some day ,needs cash and sues to "get" their share of the house?

The chickens come home to roost?

 

[seniorjudge]

Revocable living trust.

Or maybe irrevocable.

(Time for a tax CPA.)

 

[Alex23]

This is an important issue as it affects your property tax if pre prop 13. Owning a home with a low tax rate is a blessing.

If the three of you inherit the house, and one chooses to live in it, buying out the other two will re-set your property tax; you can't inherit it from a sibling.

It reduces the value of the property as it guarantees an increase in the taxes owed.

Good luck.

 

[douala]

Great advice

Thanks so much...this is all great advice!