Legal Question in Wills and Trusts in California
Will I save taxes in the future if I add my child's name to the title after the current divorce?
My ex has moved out and I plan to buy out his share of the marital home. The house has $450k capital appreciation now. I understand that two of us previously qualified for $500K capital gain exemption, now by myself I qualify for only $250K. Should I add my son (age 13) to the title, so when he turns 18, I will have qualified for $500k exemption again? Will a living trust accomplish the same goal?
2 Answers from Attorneys
there are several aspects of your plan which may cause unexpected results. you should retain a qualified tax & estate planning attorney to provide you with advice and assist you with achieving your goals.
A living trust accomplishes no tax advantages until you die, but then it is hugely more favorable than deeding to children while you are alive. When children receive property by will or trust when their parents die, the capital gains basis is stepped up to the then market value. So if they sell it immediately, there is no capital gains tax at all, and if they sell it later they only pay gains from when they received the property. Mr. Field is right that you need a complete analysis of your situation, however, before you can make a plan.
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