Quit claim deed, where and how to do it? taxes?

[disneypharm]

My parents would like to give (quit claim deed) their waterfront condo to my kids (DD12 and DD9)!!
Does anyone know the tax implications of doing a quit claim deed for us or my parents?

Any other charges or disadvantages (eg, college loans, etc for kids) of doing this now?

Where do you start doing the quit claim deed?

Is it a complicated process?

Thank you in advance for any advice.

 

[msmayor]

They want to put a 9 and 12 year old as the owners of property?

I'm not even sure that legally someone under the age of majority can own property like that.

And yes, it will most definitely have a significant effect on college funding. If they are the 'owner' of the property, it is an asset that is considered part of what is available to them to pay for college.

Methinks you need a lawyer to sort this one out.

 

[Swimalie]

Yes, you need a lawyer!

 

[Cheshire Figment]

This would be a very bad idea.

1. As a general rule, children under the age of majority cannot own real property. It would be necessary to set up a trust.

2. Gift tax returns would have to be filed by the donors. More than likely it would have no immediate tax effect on them, but would have an effect on their estate.

3. When property is transferred as a gift, it is transferred at the lower of cost or market. So when the property is sold, the kids would be liable for Income Taxes based on this low price.

4. I would suggest that if they want to do anything, they set it up in their wills that the property will go to your chldren. There are a lot of tax advantages to that.

Mike (CPA Retired)

 

[disneypharm]

This would be a very bad idea.

1. As a general rule, children under the age of majority cannot own real property. It would be necessary to set up a trust.

2. Gift tax returns would have to be filed by the donors. More than likely it would have no immediate tax effect on them, but would have an effect on their estate.

3. When property is transferred as a gift, it is transferred at the lower of cost or market. So when the property is sold, the kids would be liable for Income Taxes based on this low price.

4. I would suggest that if they want to do anything, they set it up in their wills that the property will go to your chldren. There are a lot of tax advantages to that.

Mike (CPA Retired)

Thanks Mike. Great information. I have a legal insurance through work. I'll contact one of their lawyers to get more information.

 

[momof1princess]

former legal secretary here. DH's grandmother left him a 75 acre property, on which she lived until her death. she deeded it to him several years before her death, by way of a warranty deed with life estate. basically, it meant the property would go to DH upon her death, but was hers until then. no other paperwork was necessary, and the deed is ironclad-DH's uncle went to a lawyer to try to contest it after DH's grandmother's death, and was told he had no case. this might be an option you could ask your attorney about.

 

[disneypharm]

former legal secretary here. DH's grandmother left him a 75 acre property, on which she lived until her death. she deeded it to him several years before her death, by way of a warranty deed with life estate. basically, it meant the property would go to DH upon her death, but was hers until then. no other paperwork was necessary, and the deed is ironclad-DH's uncle went to a lawyer to try to contest it after DH's grandmother's death, and was told he had no case. this might be an option you could ask your attorney about.

That could be a great option. Thanks.
The condo is my parent's vacation home, so they rent it sometimes and we use it occasionally. They will continue to pay the yearly taxes and HOA fees but they think if they give it away now, the kid's parents (me and DH ) will maintain the condo. They are getting up there in age.
I knew I have to contact a lawyer eventually, but I wanted to get as much information as possible before discussing it with one.

 

[lastminutemom]

There are significant disadvantages to it being in your children's names for college financial aid purposes. You need to take this into consideration as well.