Legal Question in Real Estate Law in Virginia

To "add" someone to the deed to the house, it is necessary to execute an entirely new deed, as if you were selling the house to strangers.

People, M and D convey the real estate to a new group of owners M + D + C.

Typically Counties will TAX this transfer with a transfer tax just as if your parents sold the house to strangers.

However, it is also possible to write a new deed which conveys the house to a child only on death. For example:

Grantors (current owners) M + D convey the property to Grantees (new owners) M + D, TRANSFER ON DEATH to Child C.

This means that the parents continue to own the house during their lifetime, but on their death ownership INSTANTLY transfers (outside of probate), to Child C.

It is possible that the County might not tax that type of transfer with the transfer tax.

You should ASK your County tax office, at the Commissioner of Revenue and Treasurer's offices.

OR.....

Grantors M + D convey real estate to M + D DURING THEIR LIVES, then to Child C.

This creates a "life estate" so that the parents own the house only during their lives and again it immediately belongs to the Child on their death.

However, in the first case the Child C owns nothing until the parents' death.

In the second case, the Child C actually OWNS a "remainder" interest as a real, genuine right in the real estate -- effectively immmediately. For this reason, your County tax people MIGHT tax this under the transfer tax.

However, it is a lot easier to simpler to just have the parents write a will which passes the house on their death to the Child as inheritance. This will probably be tax free.

If the concern is to be able to take action regarding the house during the parents' life, then this can be done by the parents creating a Limited Power of Attorney giving the Child authority to act on their behalf in relation to the house.

The other tax question is very complicated, potentially -- estate tax.

Most people will never have to worry about the estate tax. But if your parents' wealth is significant enough that this is a possibility, then the transfer of rights in the house DURING their lives might implicate the payment of GIFT TAXES.

Gift taxes are the same as estate taxes, in effect, but catch attempts to EVADE estate taxes.

This is a question for a CPA because it depends on very specific circumstances. But probably it is NOT an issue for you.

HOWEVER... where there is a possibility of paying estate taxes on teh parents' death, it can often be a GOOD idea to to transfer residual ownership of the house to the children during the parents' life. That is because the value of acquiring the house in the distant future is reduced by the fact that it is in the future.