It is sort of a legal question more than a tax question, so I will start out with saying I am not giving you legal advice. My clients ask me questions that seem to be legal all the time so I will tell you what I know, but not give you advice or tell you what you should do.
If it were my father-in-law I would take him down to an attorney and get him a trust. In fact, I think I have a friend on LI that has done some work for my clients in OC I can forward you. A couple reasons I would want a trust. A tax reason is when he passes you will get a step up in basis on property that is inherited. If you put your wife on title and if your father-in-law had a big enough estate (which doesn’t seem like it from your email) the IRS would say you inherited when you filed an estate tax return. However on your side they would, if the question came up the IRS, say you received the property as a gift and were not entitled to the “step-up” so when you sold the property you would have a gain and pay tax. A trust makes it cleaner.
I believe there are some liability issues too. I am in over my head this morning as far as explaining those to you but I do recall a few times in the past where an attorney was hesitant to add additional owners on a property because of liability. Also, had a client one time years ago that filled out quit claim deeds and gave them to their kids. One kid pre-deceased the parents. The parents intended to give the daughter-in-law her share when they passed but she didn’t want to wait. The daughter-in-law squandered a big part of her inheritance on attorney fees to get her share early. Parents spent a lot more. Doesn’t sound like an issue for you. I bring it up because I have found it is the stuff you don’t know that kills you. A trust is good protection against that.
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