Legal Question in Real Estate Law in California

For most families and most properties, it is better (for tax reasons) for sons and daughters to inherit, rather than be given during the parent's lifetime. Further, inheritance pursuant to a living trust is usually preferable to inheritance by will, at least for major items, since it avoids probate. The issue is the capital-gains tax (when the donee or heir eventually sells the property) will be a lot less (usually) if the property is inherited.

There is little difference between making a gift and charging a below-market price. To the extent the price paid were below fair market, there would be a gift of the difference in the tax man's eyes.

People are especially warned about making gifts or below-market sales of property in order to, hopefully, place it out of reach of a creditor, such as Medi-Cal.......such transfers are fraudulent, easy to discover, and get both the donor and the donee in trouble.

I recommend seeing an estate-planning attorney for a discussion of wills, trusts, details on minimizing estate, gift and capital gains taxes, avoiding probate, etc. There is no one set of recommendations that fits everyone's needs and your planning should be based on an in-depth interview with an expert in the field.

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