Legal Question in Real Estate Law in California

Re: gift deeds

The answer is "mostly yes, and possibly a little bit of no." This should tip you off that this lawyer is going to tell you the situation isn't simple. It isn't.

If everything you say in your question is factually and legally accurate, the house would now be your father's separate property EXCEPT to the extent that, after remarrying, funds belonging to the NEW marital community were used to pay down principal on the mortgage. Money that a married couple has, and therefore money they, or either of them, uses to make mortgage payments is likely to be community property, and will be if it comes from either of their wages. If the funds were gifts from you or perhaps even his pension funds or savings, fit is questionable to doubtful that they are community funds.

The point of this is, that if community funds paid 2% of the principal, the community might own a 2% so-called "pro tanto" interest in the house, so your father couldn't give by will more than 99%, that being the 98% that is his separate property and his 1/2 of the 2% community interest.

Sound complicated? It is. Lawyers who handle a lot of divorces have special software for figuring the percentages. However, if your father were to leave you the house in his will, you would probably win any will contest subject to a small adjustment for the community sliver of interest.

But, you say he wants to "gift deed" it to you? In 99% of cases, this is a very unwise selection for the parent. There are huge tax advantages to receiving property by will or, even better, through a living trust. The living trust avoids probate, avoids the gift tax, and avoids capital gains taxes on built-in appreciation when the heir finally sells the property. However, there are exceptional cases (rare) where a gift deed might make sense. You MUST see an estate-planning attorney about this; it could save you tens of thousands of dollars. Take your father with you, it will be a great favor to both of you. Let him make the decisions to avoid a challenge, later on, of undue influence. But the decisions need to be made based upon professional advice. When you are talking to the estate-planning attorney, be sure to bring up the second-wife pro tanto interest wrinkle. Have all your papers with you.

Re: gift deeds

Sure. But, there are better approaches.

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