Legal Question in Real Estate Law in California

You can transfer title to your son by (1) grant deed; (2) quitclaim deed; (3) will; (4) living trust; or (5) intestate succession (perhaps). The deeds can either transfer your entire interest at once, or you could make him a joint tenant with right of survivorship.

Each of these ways has different combinations of effect on gift taxes, estate taxes, future capital-gains taxes, the necessity of probate, and your ability to remain in some degree of control for the rest of your life.

If you have not done any estate planning, this may be the right time. Low cost, big returns.

Avoid transferring property if the purpose is to make it harder for your creditors to reach it. This is fraudulent and easy to discover.

Mr. Whipple usually gives really good answers, but his is off base badly on a few points this time. First, you ask how to transfer title, only a grant deed or quitclaim deed would do that. The other methods he mentions would eventually transfer title to your son, but not until you die.

As for your entire objective, which is to transfer title while retaining the mortgage, taxes and insurance, that is simply impossible. Taxes are owed by the record owner, i.e. whomever is on title. You could pay them for him, but you can't be responsible for them. Likewise you could pay the insurance premiums, but you cannot be the insured. The insured must be the record owner. No insurance company will insure someone who doesn't own the property against loss or damage to the property. As for the mortgage, transferring title to someone else will make the mortgage immediately due in full. Some mortgage lenders do not exercise the clause if the new owner is family and the payments are never late, but you would have to work that out with the lender in advance, and they would want to approve your son as qualified to take over the mortage in case you didn't make the payments.

Lastly, transferring title to real property to a child while you are alive is generally one of the worst tax moves you can make. Any equity in the house will be subject to gift tax that is payble by the giver, you, not the recipient. It also means that they get your basis for capital gains tax. That means if it is worth 400k now and you bought it for 100k, and they sell it in ten years for 700k, they will pay capital gains on 350k (700k minus 100k basis and 250k exemption). If they get it by will or living trust when you die, and it is worth 450k at that time, they pay no capital gains unless and until it sells for over 700k (450k basis plus 250k exemption).

Please read the numerous prior responses by a variety of attorneys on this site as to the issue of a parent transferring title to their home to a child of theirs. We all agree that in most circumstances it is an extremely unwise decision that has no or little benefit except to make the child happy. Remember that the IRS position is very reasonable--in general, if you do not own something you can not deduct any expenses for it, as what you have paid is at best a gift to the other person, who can not deduct the costs either.

I am, of course, fully aware that a will or living trust will result in a "delayed" transfer of ownership, and that's exactly what all of us are recommending to you!

A trust is your best option. Talk to a competent estate planning attorney and don't try to do it yourself.