Legal Question in Credit and Debt Law in California

Giving real property to a child while you are alive is one of the worst financial mistakes most people can make, especially if you have a mortgage. If the property has increased in value the property taxes will immediately go up. When the property is sold, the capital gains taxes will be far higher, you may subject yourself to an immediate gift tax bill, and worst of all, it will be an event of default on the loan, and the lender will be allowed to foreclose. Other than that it's a great idea.

You should speak with an estate planning attorney. I agree with Mr. McCormick about the drawbacks of an outright transfer at this time.

Instead, you might create a trust and name your son as a beneficiary of the trust. In that way, he'll get the property when you are gone. Also, if your son is a parent of the granddaughter living with you and hasn't contributed to her support, what makes you think he'll pay the mortgage right now?

There also might be other ways to handle the mortgage, about which an estate planning attorney should be able to advise you.