Legal Question in Real Estate Law in California

That's a very loaded question, because "my interest" can mean a WHOLE lot of things in the context you describe. Without knowing how long you have been married, the source of the down payment funds, the overall separate, community and quasi-community status of the down payment and closing funds, whether or not you have wills and maybe a living trust, how the mortgage will be held and paid, your estate planning intentions for each of your children, your estate planning intentions for each other, your insurance coverages for each other and intentions for insurance, and so on and so on, it is just impossible to advise you on a question that broad. If all you mean is what to do about your 1/2 interest in the house, it's simple, take title as "joint tenants." But even that has lots of implications for your community and separate property situation, and might mess up an estate plan if you have a will and/or trust. It can result in a gift to the community of separate property, for example, which not only would have an impact in a divorce, but also for each of your kids from an estate planning angle. If you read my other answers you will see that I strongly favor people getting things done without a lawyer when possible. So you know I'm being honest with you when I say this is one that is worth paying an attorney for an hour or two, to go over your situation and make some recommendations.

Mr. McCormick is quite correct.

For some reason, I feel uncomfortable with the two previous answers. I would say DON'T take title as joint tenants or as community property with right of survivorship. Both of these forms of holding title assure that, upon the death of the first of you, the survivor will get the house, and the deceased partner's children probably won't. I am not a specialist in estate planning, just a real-estate guy, but my instinct is to tell you to take title as tenants in common. Then, each of you can direct what happens to your half-interest in the property through a trust (or the more old-fashioned way, a will creating a life estate in your spouse and naming your children as remaindermen).

I'm supposing that your intention is that the surviving spouse of the first to die would continue in possession until he/she passes away, then the half shares of each would go to, or would have gone to, his/her descendants.

Estate-planning specialists have plenty of tools in their heads and their word-processors to accomplish exactly what you have in mind, and can also get you the best possible results in tax and probate avoidance, by advising how to take title and how to prepare and use wills and trusts. I strongly suspect an optimum solution here will be taking title as tenants in common and setting up two separate but coordinated trusts - but a specialist is needed to be sure and to do the work for you. This is repetetive work for estate-planning lawyers, and therefore needn't cost an arm and a leg, but your heirs will thank you for your efforts!