When it came down to a choice between the possibility of losing the house on account of an unforeseen financial difficulty of the child and having the child wait for the money while a short probate procedure was completed, the parent usually chose the latter.
A: Thanks for your comment to one of many questions we’ve also been asked over the years about how to leave property to a child. Like you, we’ve found that the top way parents hope to accomplish this goal is by simply adding the adult (and in some cases, minor) child to the title via quitclaim deed.
In past columns, we’ve mentioned that conveying title to a child while the parent was still alive could have adverse tax consequences. In those columns, we’ve mentioned that the children may find that they have to pay more federal income taxes when their parents die than if they had inherited the home by will or through a trust.
In the most common example, a parent may own a home that has appreciated in value over the years. Upon the death of that parent, and the sale of the home shortly after the death of the parent, the child would inherit the home at a stepped-up basis. This means that for purposes of selling the home, the value of the home to the child is the selling price even if the parent purchased the home at a fraction of the price years ago. READ MORE