Legal Question in Wills and Trusts in California
Parents Property to Daughter
My parents are joint tenants in a home that is mortgaged. I live with them in the house as they are both elderly and help take care of them as well as help out with the mortage payments and other home expenses. My father would like me to keep the home in the event of his death, as my mother has little income (only Social Security) and would not be able to continue making the payments on her own. They do not have any other assets, retirement monies, insurance policies, or savings to speak of; it is planned that my mother will remain with me in the home or have the option to live with my sister if she chooses. What documents would they need to file in order for me to keep the house?
2 Answers from Attorneys
Re: Parents Property to Daughter
The best thing they can do is a living trust, which will have a number of tax benefits, plus make the transition easier by avoiding probate in the future when the second passes away.
Re: Parents Property to Daughter
I agree with Attorney Koenen and here is why.
They could transfer the property to you right now. If so, then you would file a parent to child transfer to avoid the transfer tax; it's a little more complicated, but this is the effect.
Proble with the above...they have to make an immediate transfer to you. This has its own step-up in basis problems when you sell the property at a later time.
Under a family trust, the property remains in their names but becomes part of a trust. When the first passes, their 1/2 ownership becomes part of a secondary trust within the family trust. The value of the 1/2 is frozen in, respects to taxes, for any increase in value, at that point in time.
This is a big part of the savings Atty Koenen is referring to in his answer. There is more, but it can be a bit complex to explain in this forum. Other ways of using the family trust include tranfers with rent back, etc. to assist in removing other assets from a person's estate, but that does not seem to be of issue in your circumstance.
Please feel free to learn a bit more about trusts in general on our firm's website at www.No-Probate.com.
Regards,
Scott
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