How can parents transfer the deed to their home to an adult child?

Answer 1

The most secure way to insure that the property is protected from any creditor attachment is to have an attorney or title company draw up a warranty deed making the adult children as Joint Tenants With Rights To Survivorship rather than deeding the property solely to an adult child/children. To deed the property directly to the child/children could subject it to taxation depending upon the circumstances. When property is titled JTRS it passes directly to the other tenants and is not subject to probate action nor can it be attached for debts belonging to the deceased. The lender's investment is secure regardless of how the property is titled. Mortgages are secured debts secured by the collateral property via a Deed of Trust. * However, as you say there is a mortgage, you probably cannot change the ownership title in any way without the permission of the mortgage company. * this q has a discussion

Answer 2

Well, you can just give them the deed in exchange for free rent for life, but it could eventually cost you in estate taxes.

You could also grant the deed to the children with a reserved life estate for yourselves, but it would still be assessed as a taxable gift based upon the present value of the house with a future interest, whatever an appraise says that is.

Some parents grant a portion of the property interest yearly, so that each year does not exceed the statutory exemption for annual gifts. So, if there are two owners and two children, there would be four exemptions each year.

Say the annual exemption is $10,000 and the home (with or without a life estate) is worth $160,000. It would take four years to give the entire amount tax-free.

Each annual deed would grant "an undivided twenty-five (25) percent interest" in the described property, and after four years, the undivided interests add up to 100 percent.

There are other estate and tax planning techniques that may work better for your particular circumstances, so it would be best to contact a local tax professional.

Answer 3

The deed has to be prepared and signed, and thereafter recorded in the deed records of the county in which the house is located. There are issues involved, such as possible loss of homestead exemption, possible gift taxes, possible fraudulent conveyance, possible loss of the stepped up basis as of the parents' deaths, and more.

Answer 4

You would convey the property to your children reserving a life estate for yourself in the deed. The children would become the legal owners of the property but it would be subject to your life estate: your right to the use and possession of the property for the duration of your natural life. You should seek the advice of an attorney before making such a transfer to discuss your options and the legal consequences for all parties.