Legal Question in Real Estate Law in Oregon

Re: gift of real estate to family

I would recommend setting up a trust to handle this type of transaction. Real estate is transferred in percentages rather than dollar amounts, and you make the recipients co-tenants (partial owners with all rights and responsibilities attendant to).

What you're proposing to do needs to be properly structured with the assistance of an attorney, so that there won't be unintended consequences. What happens if someone dies? Declares bankruptcy? Taxes/maintenance needs to be paid? Gets divorced? What about the opportunity to pass property with a stepped up tax basis?

Re: gift of real estate to family

Any transfer of the family home from parents to children while one or more parent is still alive takes very careful consideration and is rarely an appropriate way to deal with the property.

There are a number of issues that arise with an intergenerational transfer. When real property is transferred in the manner you suggest, the heirs will lose the step-up in basis that occurs on death. The parents lose flexibility to sell, mortgage, refinance or reverse mortgage the house. They also lose the right to defer property taxes, which Oregon allows seniors to do. They also lose the ability to sell the property and avoid taxation on $250,000 to $500,000 of the capital gain, which is only allowed to the owners of their primary residence. If some of the residence is not owned by the parents (who reside in it), then none of this gain avoids taxation.

If the idea here is to avoid probate, there are far better ways to do so. Further, in Oregon, probate is not that difficult or expensive and the loss of various tax advantages will far exceed the cost of a probate.

Our office often assists families with issues such as yours. We also offer a low cost initial consultation.