When, if and under what circumstances should I consider adding my son to co-own my home so he will not have to pay higher taxes on the property? 5 Answers as of January 22, 2015

As a disabled female on Social Security, my son is helping me financially. Does his non-monogamous live-in girlfriend (co-habitating) have any rights to my property if she financially contributes to my home or care? Right now they've been together for about 6 years and beginning in February my son will have to help support me as Social Security does not cover all my living expenses including my mortgage. I'm mainly concerned if they break up down the line and fear she could ask for remuneration or something on my home. Also, When, if and under what circumstances should I consider adding my son to co-own my home so he will not have to pay higher taxes on the property when he inherits it?

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LAW OFFICE OF ROBERT I LONG
LAW OFFICE OF ROBERT I LONG | Robert I. Long
I caution against adding him to title now if he will inherit it after you die, if the house has increased substantially in value since you first went on title or, if you yourself inherited it from a spouse or parent, from the date of the original acquisition. A person gets a free step-up in basis for property they receive by inheritance, but they may not receive that in a voluntary transfer during life (inter vivos transfer). The difference could be huge in a subsequent sale (by your son, after you are gone) in terms of capital gains. Please consult an estate planning attorney or a CPA to run the numbers before adding him to title now, and be sure to understand that once he is added the only way he comes off title is by his voluntary re-conveyance to you. You will not have the ability to take him off title without his cooperation. The girlfriend has, at most, a creditor claim for any contributions she has made, and any claim she has is probably off-set by benefits she has received, such as having a place to live. In California, under Prop 13, the effect on property taxes should also be considered before making any lifetime change to title.
Answer Applies to: California
Replied: 1/22/2015
Law Ofices of Edwin K. Niles | Edwin K. Niles
1. There is a parent-child exemption from reassessment, so if it is property tax which concerns you, rest easy. That, in itself, is not a reason to transfer. 2. If you have owned the property for some years, you may have a built-in capital gain, which might be a concern upon sale during your life-time. However, if your son inherits the property upon your death, he gets a stepped-up basis, so as to effectively eliminate the gain. You should probably consult a tax expert about this, if it is a concern. 3. The fact that the girl-friend is living there is not enough for her to gain any interest in the property. However, she might (if so inclined) file some sort of suit after your death; who knows what people will do? If you think that she might be so-inclined, you could ask her (at the time of the move) to sign a waiver, in which she gives up any right to claim an interest merely by virtue of residence. 4. Most estate-planners feel that it is bad business to add a child to title. Should you need to sell or re-fi or decide to rent out a room or two, he can get in the road if he is an owner. You know your son and I don?t, so you can make that decision. Just know that almost any lawyer has horror stories about children being on title.
Answer Applies to: California
Replied: 1/7/2015
Patrick W. Currin, Attorney at Law | Patrick Currin
Adding your son to title while you are alive will actually increase his taxes on gain on the home. The best idea would be to create a trust, putting the home in the trust with your son as the sole beneficiary as to the house. The home will be reassessed at your death and that value (rather than current value) will be what your son will have going forward. Also, for property tax purposes the transfer to a trust and to your son will not trigger a re-assessment for property tax. The girlfriend would not have any rights anyway, but this would make it clear.
Answer Applies to: California
Replied: 1/7/2015
Law Offices of R. Christine Brown | R. Christine Brown
If you son inherits your residence, he will not have to pay higher property taxes upon your death. There is a parent to child exclusion in CA, where the amount of annual property taxes paid by the parent is the amount paid by the child.
Answer Applies to: California
Replied: 1/7/2015
James Law Group
James Law Group | Christine James
Do a living trust. If you add him while you are alive, that is when you are creating a tax issue. If you leave it to him on your death he gets what is called a "step up in basis" and it will be a non-tax event.
Answer Applies to: California
Replied: 1/7/2015
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