You Can Quitclaim Your Home to a Loved One to Skip Probate Costs. Is It Worth It?

A quitclaim deed easily, quickly transfers your home’s title. You can use a quitclaim to give a home to someone else, with no expectation of a payment from the recipient. Some people use quitclaims to pass homes to their family members.

So, is this a good way to carry out your wishes yourself — a sort of early estate planning? Who needs their home going under a probate court’s supervision after they die, right? And who wants to pay huge fees to the county for the trouble?

Fair questions. But…

First, How Pricey Is Probate? Maybe It’s Worth the Price?

Probate cases cost money. They can easily suck up 4% or 5% of all the value you had. First there’s a filing fee: a few hundred dollars. Appraisals of personal items can cost several thousand dollars. There are the executor fees. And the accounting fees.

Probate also takes time. The distribution of value to creditors and heirs can easily span a year and a half.

But probate is a valuable process. Under court supervision, your debts and liens will be resolved. Your home will be conveyed with the probate court’s official deed when the process wraps up.

And there’s a silver lining in probate. It’s the stepped-up cost basis for your home. That’s a big deal. It allows your chosen recipient a tax-advantaged way to sell the home once the probate timeline allows for that. If you bequeath the home through your will, your designated new owner can sell the property and receive its value without having to pay capital gains tax on all the appreciation in your home ever since you first acquired it.

Early Transfer to Your Heir, Using a Quitclaim? Be Sure This Is What You Want to Do.

To keep away from probate, you could certainly transfer your home at any time to anyone you like, using a quitclaim. A quitclaim needs no title search. Therefore it makes no promises about the state of the title. It simply transfers the interest described on the deed to the recipient. The giver is the grantor, and the recipient is the grantee.

So, as a homeowner, you’re always free to fill out a quitclaim deed, naming yourself as the grantor and the person you choose as the grantee. Use your current deed’s exact legal description. You would make sure the recipient accepts your gift, then have the deed notarized and recorded in your county. This puts the new owner’s name in the county records. Done.

Deeds.com offers quitclaim deed forms for any state and county. Our forms meet the legal rules to properly transfer your home.

But understand your tax situation first. Unless you’re giving your interest to your spouse, the IRS counts your home’s value against your lifetime gift tax exemption. Check your state’s gift and transfer tax rules, too.

Most important, though, is the loss of the stepped-up cost basis for your home, as we’ve described in the section above. This is a key reason people do not use quitclaiming as an estate planning shortcut.

Giving Your Loved One a “Pocket” Quitclaim? Here’s What Happens.

A quitclaim deed transfers an interest in real property to another person — very often, between people who are related. Sometimes, a quitclaim is just given to a loved one to keep “in case something happens to me.” The recipient stuffs the paper away in a drawer without recording it. Sometimes, that’s the end of the matter, as the deed gets forgotten.

Fast-forward to the homeowner’s death. The intended property transfer was never recorded, so the probate court will deal with transferring the home out of the estate.

Others might question any “pocket” quitclaim deed that appears at this point. They might not believe that the late owner really meant to give the home away. After all, that intent was never formalized through the county records. Now, there’s a title dispute. The crisis could have been averted, with proper recording.

Does this mean unrecorded deeds are never good? No. Some states accept unrecorded deed transfers as valid. But some states void them, to prevent tangled titles later on. Not surprisingly, homes with unrecorded deeds sometimes end up being transferred to multiple people.

All things considered, it’s best to avoid pocket deeds of any kind. Giving or getting real estate? Make sure the deed gets recorded!

You Could Always Quitclaim the Title Into a Trust…

A living trust is an excellent method for passing a home’s title along. This kind of trust is revocable throughout your life, just in case you change your mind or you run into a situation where you need your home equity. A trust has the benefit of flexibility.

A visit to an estates and trusts lawyer can ensure your trust document adheres to state law. And then it’s done. After your death, your loved one receives the deed to your home without the need for probate.

You’ll recall how a last will gives the beneficiary a stepped-up cost basis for the home. Transferring the house through a revocable living trust gives your recipient the same tax advantage.

You can create a trust that allows for refinancing in the future if you wish.

To quitclaim a home into the trust:

Sign the deed over to the name of your trust, naming the trustee and successor.

Be sure the trust document and the quitclaim deed include the home’s address, and the legal description reflects what your most recently recorded deed states.

Sign and date the quitclaim in front of a notary and file the documents with the county recorder of deeds. The county provides fees and transfer tax information and rules for supplemental documents.

A sole owner can create a trust for a home any time. So can co-owners (who must all sign the living trust document). With a trust, you designate a successor trustee (you’re the original trustee) to carry out the goals of the trust when you die. That would include deeding your property from the trust to your recipient.

Meanwhile, though, using your social security number, you could sell your property from the trust if you wish. You have that flexibility during your lifetime.

What About the Mortgage? And a Few Words to the Wise.

If you pass on with a mortgage still on the home, someone acting on your behalf must pay it off or refinance it. In probate, if the recipient of a home can’t take on the debt, they will get any proceeds available from the sale.

By law, the beneficiary of a trust may keep the mortgage on the home, if you had one. Read more here:

Leaving a home to someone else, with a mortgage still on it? Learn more in: After You’re Gone, Does Your Mortgage Live On?

On that note, get your mortgage company and all insurance representatives on board before quitclaiming your home, or deeding your home into a trust. It’s important that they know the home is now under a new name.

Before making that final decision to convey or accept real estate, consult your tax pro and your attorney for guidance. Quitclaims can impact taxes and government benefits and more. Always remember that quitclaiming a home is not a promise of a clear title.

Supporting References

Deeds.com: Best Way to Inherit a Home in Probate: Executor’s Deed, Administrator’s Deed, or Quitclaim? (Jun. 23, 2023).

Deeds.com: Warning: When Not to Sign Over Your Deed (Apr. 7, 2023).

Deeds.com: Using a Quitclaim Deed: What Are the Drawbacks? (Nov. 7, 2022).

Deeds.com: The Monster Under the Bed: When a Home’s Past Holds an Unrecorded Deed (Oct. 23, 2020).

Deeds.com: Can I Quitclaim My House Into a Living Trust? Using the Quitclaim to Keep a House Out of Probate (May 11, 2022).

Julie Garber for The Balance (part of Dotdash Meredith): How Much Does Probate Cost? Probate Costs Can Vary by State (updated Jun. 3, 2022).

And as linked.