What to do with property

[lovchristina]

What is the name of your state? California

My father has recently been told he has less than 6 months to live. We have a living trust for him and his house is in it. I am successor trustee and sole beneficiary as he is unmarried and I am an only child. My husband and I currently live in the house and intend to stay when he passes. I know that the trust is going to make it easy for me to transfer ownership to my name but I was thinking of putting the title in both my husband's and my name. I know that inheritance is normally exempt from community property and I was wondering if that would be invalidated if I add his name? In other words if I put the house in both our names instead of just mine does that now make it so he would acquire half the assets of the property if we ever divorced? Are there any down falls to adding his name?

 

[tranquility]

Yes, there would be a community property presumption. Depending on how you hold title, there would be lesser tax advantage when one of you dies.

If you put it in your name now, you would probably need to (Acutally, your dad would.) file a gift tax return--although no tax would probably be due. You would take your dad's basis in the house at the time of the gift. This is usually a bad thing. However, the transfer would start the clock running on the 121 exemption on personal residence. You would need to talk to a tax advisor using actual numbers and explaining your goals.