Legal Question in Real Estate Law in California

Re: how to put my adult child on title

Putting anyone on title to your property raises a number of issues. First, the question of propriety of such a transfer involves looking at a number of "potential" situations that occur in the future. First, depending upon the age of your child, you run the risk that the child could incur some liability that would, by their partial ownership of your property, attach to, and impair your ownership interest. Second, if you should at some time in the future decide that they should no longer be on title, it takes their signature on a deed to remove them from title. Third, there are a series of potential income and property tax issues surrounding transfers of property without consideration.

From an income tax standpoint, the transfer of a substantial interest in the property may trigger a gift tax to your child. Depending upon the equity in the property, 50% given to a child might be more than the current limits on non-taxable gifts, and require your child to pay income taxes on the "gift" of the property to them. Additionally, with respect to property taxes, unless you handle the transaction properly, you could have 1/2 of your property re-assessed by the County Assessor's office and have your property taxes increased. There is an exemption from re-assessment for transfers from parent to child, however, you have to make a claim for that exemption or the tax assessor will reassess the property automatically.

Finally, if you refinance in the future, unless your child can qualify for the loan with you, they would have to be taken off title, and then put back on after the refinance is complete.

I would have to suggest that there are alternatives if your intention is to do this for estate planning puposes. The use of a trust, family limited partnership and other tools might be a better option if that is your goal. If you really intend for this to be a gift (and not part of your estate planning), then I would still suggest that you meet with an attorney to review all of the potential consequences of making such a transfer.

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