Legal Question in Real Estate Law in California

My husband and I are purchasing a house with cash in California. Since 70% of the fund is coming from my parents, I want to protect my parents' fund.

I have two questions regarding the title:

1) Title under only my name: If something happens to me in few years (let's say I went a better place), what would happen to our property? Does my husband automatically receive to the property without having any tax disadvantage?

2) Title under both our names: If we divorce in the future, how can I protect my parents' fund?


Asked on 10/10/10, 1:24 am

1 Answer from Attorneys

1. If title is in your name alone, and you have no will and no other heirs, and you pass away, your husband would have to probate the property, but would then receive 100% title in his name alone, with no change in property tax and a stepped-up capital gains basis. Your parents would get nothing.

2. With title in both you and your husband's names, your parents would get nothing if you divorce.

The only way to protect your parents' funds is either to give them a share of title, take title in your name alone and make a will that gives them back their fund if you die, or make the money from them a loan with a recorded deed of trust.

You should be aware also that if you do not either give them 70% title to the house, or take the money as a loan, your parents may be liable for a substantial gift tax. You should consult with a tax professional before deciding how to structure this transaction and title.

Read more
Answered on 10/15/10, 9:10 am


Related Questions & Answers

More Real Estate and Real Property questions and answers in California