Q: We would like to help our daughter purchase a house in California. We will not be living in the house. Our Qs are below
1) If the Title is held jointly by our daughter’s Trust and our Family Trust (my wife and I are Trustees) can we avoid reassessment when our ownership interest passes to her Trust upon our death? Do we need to set up a revocable Trust now for our ownership to pass to her upon our death?
2) Would the ownership have to be set up as Joint Tenants at the time of purchase?
3) Can the ownership be set up as 50% for each party even though we are paying a bulk of the cost of the house?
4) Does joint tenancy imply we actually have to live in the house?
5) Can we take our name off the Title at any point in time without triggering a reassessment?
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A:
When helping your daughter purchase a house in California, holding the title jointly between her Trust and your Family Trust can potentially help avoid reassessment when your ownership interest passes to her Trust upon your death. However, setting up a revocable Trust now could simplify this process and ensure that the property transfers smoothly according to your wishes. You might want to discuss with a legal professional whether this strategy aligns with your specific goals.
Regarding ownership setup, joint tenancy at the time of purchase is not required unless you want the property to automatically pass to the surviving owner upon the death of the other. Ownership can be divided as 50% for each party, even if you are contributing more financially; this arrangement should be clearly reflected in the title.
Joint tenancy does not require you to live in the house. If you decide to take your name off the title later, be mindful that doing so might trigger a reassessment, depending on the specific circumstances and how the transfer is handled. It's important to consider these factors carefully to avoid unintended tax consequences.
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