Before You Put a Home in Your Child’s Name, Read This

A California parent’s guide to gifting property, trusts, and the decisions that shape a family’s legacy.

By Betty Wang, Associate Broker | Team Betty Wang

“I’m buying it for my child anyway. Why not put it in their name?”

It sounds practical. Generous, even. You worked hard, built equity, and want your children to have a stronger start.

But a name on a deed can do far more than establish ownership. It can change who controls the property, how a future sale is taxed, and what happens when family circumstances change.

As a mother, I understand the desire to make life easier for our children. As a real estate broker, I approach that decision with another question:

Will this arrangement still serve your family ten or twenty years from now?

For families with valuable real estate in Brentwood and across Los Angeles, that question deserves attention before an offer is written or a deed is signed.

Start With the Purpose of the Gift

Are you helping your child buy a first home? Passing down a property you have owned for decades? Creating rental income? Or hoping to keep a family home available for future generations?

These goals can call for different strategies.

There is also a practical question parents sometimes overlook: What if you need the equity later—for retirement, care, or a move closer to family?

A generous plan should account for your financial security as well as your child’s.

Adding a Child to Title Is an Ownership Decision

Adding your child’s name can transfer a real ownership interest. Depending on how title is held, selling or refinancing may require their participation. A later disagreement can become a property dispute.

Ask your attorney what rights you are transferring, whether you can reverse the arrangement, and what happens if your child dies before you.

“We trust each other” is a wonderful starting point. Clear documents give that trust a structure when life becomes complicated.

The Tax Surprise May Arrive Years After the Gift

For appreciated property, an outright lifetime gift generally carries over the parent’s adjusted tax basis for calculating a future gain. Qualifying inherited property generally receives a basis adjustment to its fair market value at death—often called a step-up in basis.

Consider a simplified example: Your home has a $600,000 adjusted basis and is worth $2.4 million.

If you gift it outright and your child sells for $2.4 million, the starting gain calculation could be $1.8 million. If they instead inherit qualifying property valued at $2.4 million and sell for that amount, the starting gain could be near zero.

This illustration excludes selling costs, exclusions, later appreciation, and other adjustments. It shows why timing matters; it does not predict a tax bill.

Source: IRS Publication 551

Gifting cash so your child can purchase a new home is a different scenario. Purchased property generally starts with a cost-based basis; your old home’s embedded appreciation is not being transferred.

Source: IRS: Basis of Assets

Large gifts may also require a federal gift tax return even when no immediate gift tax is due because an available lifetime exemption covers the gift. Paying for a home titled to your child can itself constitute a gift. Ask your CPA to review the funding before closing.

Source: IRS Gift Tax FAQs

A Trust Can Create Flexibility—but the Type Matters

A properly structured and funded revocable living trust can allow parents to retain control, establish a successor to manage assets during incapacity, and direct how property passes after death, generally avoiding probate for assets held in the trust.

The word “funded” matters. Signing a trust document and placing the home into that trust are separate steps. Have your attorney confirm the deed and ownership records match the plan.

For qualifying property passing through a revocable trust, a basis adjustment at death may remain available. However, an irrevocable trust can have very different consequences. The IRS has specifically ruled that assets of certain irrevocable grantor trusts outside the owner’s taxable estate do not receive that adjustment merely because the owner dies.

Source: IRS Revenue Ruling 2023-2

A trust should be selected for its terms and purpose. The label alone does not establish the tax outcome.

California Has a Second Tax Conversation: Proposition 19

Capital gains basis and annual property tax assessment are separate systems.

Under Proposition 19, the parent-to-child property-tax exclusion generally requires a qualifying family home to become an eligible child’s principal residence. The homeowners’ or disabled veterans’ exemption must generally be claimed within one year, and a separate exclusion claim is required.

Value limits can cause a partial reassessment even when the home qualifies. Rental properties and second homes generally do not qualify for this family-home exclusion. Holding property in a trust does not bypass these rules.

Source: California BOE: Proposition 19

For a Brentwood family whose children live elsewhere, this can change the economics of keeping an inherited home as a rental. Compare projected rent with the property-tax assessment, insurance, maintenance, and management costs that would apply after the transfer.

The important question is whether the children can—and want to—carry the property forward.

Plan for Creditors, Divorce, and Different Priorities

An outright gift puts ownership into your child’s financial and legal life.

A revocable living trust generally does not shield your own assets from your creditors. California law expressly makes revocable trust property available to the settlor’s creditors during their lifetime.

Source: California Probate Code §18200

If protection for a child is a priority, ask your attorney whether a continuing beneficiary trust is appropriate. Creditor protection and divorce outcomes depend on the terms, applicable law, and how assets are handled.

Also discuss the everyday issues: If one child lives in the home, who pays the expenses? If another wants to sell, how is a buyout valued? Who approves repairs?

Equal ownership does not automatically produce equal experiences. A thoughtful plan anticipates those differences.

Bring These Questions to Your Attorney and CPA

• Should we gift cash, transfer property now, or arrange an inheritance?

• What are the projected capital gains, gift tax, estate tax, and property tax consequences?

• How much control—and access to equity—do we need to retain?

• Which trust structure fits our goals, and has the property been properly transferred into it?

• Would the children qualify under Proposition 19?

• What happens if a child divorces, faces creditors, dies first, or wants to sell?

• How will expenses, occupancy, and sibling buyouts be handled?

Bring your deed, mortgage information, property-tax bill, purchase records, improvement records, and existing estate documents. Useful advice starts with accurate facts.

Build the Plan Around the Life You Want Your Children to Have

My approach to real estate includes the decisions that come after the purchase: whether a property will support your family, remain manageable, and preserve future choices.

At Team Betty Wang, we work alongside your estate attorney and tax professionals, contributing the real estate perspective—market value, sale options, ownership costs, and the practical demands of keeping a property.

Before you add a name to the deed, let’s talk about the future you want that property to support.

This article provides general education, not legal or tax advice. Consult a California estate-planning attorney and qualified tax professional before changing title or transferring property.property tax