Legal Question in Wills and Trusts in California

Re: Living Trust vs. Quit Claim

It is always better to remain in control. Once you relinquish ownership of the house (i.e. with a quit claim deed), you are at your daughter's mercy. If you want to give the house to her, form a Revocable Trust, naming her as the beneficiary of the house, and transfer the house into your Trust. So long as you own the house and can change your mind, your beneficiaries are advised to stay on your good side. Maintaining ownership of the house also means that you have the right of possession (right to occupy the house).

Re: Living Trust vs. Quit Claim

Once you have gifted your house to your daughter you will be dependent upon her to remain in possession. A revocable trust will better protect you even if your daughter is not able to use tax benefits. Also, the step-up in basis for calculation of gain is lost to your daughter if a gift is made (resulting in carry-over basis). You should consult a qualified estate planning attorney who is knowledgeable regarding income tax issues before making any changes to your estate plan.